KFC, Pizza Hut defy recession

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Restaurant Brands, the operator of the KFC and Pizza Hut franchises lifted second quarter sales 4.8 percent from a year earlier to $96.9 million.

Same store sales for the 16 weeks ended September 14 were up 6.9 percent, with KFC and Pizza Hut recording same store sales growth during the quarter, although Starbucks Coffee sales were down, Restaurant Brands said today.

Last week the company said it expected half year net profit, excluding non trading items, to be around $8.7m, an increase of $4.1m on a year earlier.

The improved profitability was largely due to sustained strong sales growth in the KFC brand and continued turnaround by Pizza Hut. The half year profit is to be announced on October 16.

In today's statement, Restaurant Brands said the economic recession had not adversely affected overall sales growth, with the 4.8 percent rise in the second quarter on top of a 4.3 percent lift in the first quarter.

Year-to-date total sales were $169.7m, up 4.6 percent on the prior year across the three brands, with year-to-date same store sales improving 6.7 percent.

KFC, responsible for 70 percent of company sales with 84 stores, had second quarter sales growth of 7.6 percent to $68.2m. On a same store basis sales were up 9.2 percent.

The increase in total sales was achieved despite the closure of three stores since the equivalent period last year, Restaurant Brands said.

Two stores were closed for part of the quarter for extensive transformation, and it was planned to have almost half the stores in the network transformed by the close of the year, with three further stores scheduled for upgrades.

Also, one new store would be in operation by the close of the year with further new stores planned in the new year, Restaurant Brands said.

For the year-to-date, KFC's sales of $118.2m were up 7.1 percent on the prior year and up 8.8 percent on a same store basis.

At Pizza Hut, total sales for the second quarter were up 2.4 percent to $19.9m, with same store sales up 5.2 percent.

Year-to-date, total Pizza Hut sales of $35.4m were up 2.4 percent on a year before, with a same store increase of 5.2 percent. The 92 stores were two down on the equivalent quarter last year.

A programme to progressively close dine-in restaurants continued as leases expired or the opportunity to exit a store arose, Restaurant Brands said.

Starbucks Coffee quarterly sales fell 5 percent to $8.8m on a same store basis, and were down 8.4 percent for total sales with two less stores than the equivalent quarter last year.

The brand had softening demand for coffee and food during the quarter. Management changes in the previous quarter along with pricing, product mix and customer offer changes had been implemented to address the change in demand.

For the year to date, total Starbucks sales of $16m were down 7.1 percent on the year before, and 3.8 percent down on a same store basis. Store numbers were stable at 42 for the quarter.

Restaurant Brands' shares reached a year high $1.25 yesterday, closing at $1.23, having been as low as 57c last November.

NZPA