A customer rides his bike in front of a Taco Bell restaurant in Novato, California.
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Yum’s other two chains, Pizza Hut and Yum, also missed Wall Street’s estimates for same-store sales growth.
Shares of the company dropped 4% in premarket trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 80 cents, adjusted, vs. 94 cents expected
- Revenue: $1.339 billion vs. $1.344 billion expected
The company reported fiscal third-quarter net income of $255 million, or 81 cents per share, down from $454 million, or $1.40 per share, a year earlier.
Yum said that changing the fair value of its GrubHub investment dragged down earnings by 15 cents per share. Yum bought a 3% stake in the third-party delivery app last year as more national chains looked to lift sales by offering delivery. GrubHub has struggled this year as fierce competition with the likes of UberEats and DoorDash has put pressure on its business. Shares tanked 40% on Tuesday after GrubHub released a gloomy forecast for its fourth quarter.
Excluding refranchising gains and other items, Yum earned 80 cents per share, missing the 94 cents per share expected by analysts surveyed by Refinitiv.
Net sales dropped 4% to $1.34 billion, meeting expectations.
Pizza Hut, the laggard of Yum’s three chains, reported flat same-store sales growth, falling short of Wall Street’s estimates of 1.5%. Yum has been trying to turn around the struggling pizza chain. Last quarter, executives said that Pizza Hut could close more than 400 stores to restructure franchisees’ businesses.
KFC also narrowly missed same-store sales expectations. Taco Bell saw same-store sales growth of 4%, topping estimates of 3.5%.
Across all three chains, Yum opened 389 net new stores during the quarter.