Yum! Brands' Q3 profit drop as China sales drop

Yum! Brands, the operator of Taco Bell, KFC, Pizza Hut, and WingStreet restaurants worldwide, posted…

Yum! Brands, the operator of Taco Bell, KFC, Pizza Hut, and WingStreet restaurants worldwide, posted a drop in profit for the third quarter as its business in China continues to be affected by the December poultry supply incident.

The chain's revenues for the third quarter ended 7 September 2013, dropped 3%, to $3.47bn from $3.57bn last year. Company's third-quarter profit plunged to $152m.

Third-quarter same-store sales, or sales from stores open for at least a year, fell by 11% in China, including a 14% drop at KFC and 5% growth at Pizza Hut.

According to the company, sales from China accounts for more than half of Yum! Brands total revenue; however, this has been impacted by a slowing economy and a food-safety scare.

During the third quarter, the Louisville, Kentucky-based company opened 364 new outlets.

The chain's international system sales grew 1%, including 5% growth at Yum! Restaurants International (YRI). System sales declined 2% in China and were flat in the US.

Commenting on the outlook, Yum! Brands chief executive David Novak said Pizza Hut business in China continues to deliver strong results, and the rest of Yum! is performing generally as expected for the full year.

"As evidence of this, we expect to open at least 700 new units in China this year, as we capitalize on the world's fastest growing consuming class. Outside of China, we expect record new-unit openings for Yum! Restaurants International and in India this year. When you add it all up for Yum!, we will open at least 1,850 new restaurants outside the U.S., further strengthening our leadership position in emerging markets," Novak added.