Yum misses estimates on Pizza Hut slice

Yum Brands missed analysts’ estimates for quarterly profit on Thursday, as the fast-food chain operator spent aggressively to revive sluggish traffic at Pizza Hut.

Stiff competition from Domino’s Pizza and Papa John’s International has led to a stagnation in same-store sales at Pizza Hut in the past year and Yum has fought back through a slew of promotions.

Still, US same-store sales at Pizza Hut rose only 1% in the fourth quarter. Operating margins at the business fell to 33.1% from 38.8% in the latest reported quarter.

“For both the US and international business, sustainable improvements in sales growth will remain a slow build as we update and reposition the asset base and make the messaging more distinctive,” CEO Greg Creed said.

Meanwhile, Taco Bell, the company’s fastest-growing brand, recorded its strongest growth in same-restaurant sales in seven quarters.

Worldwide same-store sales rose 6% at Taco Bell, easily topping expectations of a 4.35% increase, according to Refinitiv estimates.

Yum has been taking the UScentred Taco Bell’s burrito and tacos menu overseas to replicate the success with its KFC business.

This weighed on the unit’s operating margins, which dipped to 31.9% from 33.6% in the quarter.

Strong sales at KFC and Taco Bell helped drive the company’s global comparable store sales up 3%, topping estimates of 2.48%.

The company’s net income fell 23% to $334m in the three months ended December 31. Excluding one-time items, Yum earned 40c per share, widely missing estimates of 95c.

Total revenue fell 1% to $1.56bn, also missing expectations of $1.59bn.

Yum’s share price fell nearly 2% to $93 in early trading on Thursday.