Pizza Hut’s sales stumbled last quarter

The pizza chain’s domestic same-store sales fell 6% and executives blamed a shortage of delivery drivers. Taco Bell and KFC sales both increased.
pizza hut same-store sales
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Pizza Hut’s U.S. same-store sales declined 6% in the first quarter, parent company Yum Brands said on Wednesday, amid an increasingly difficult market for traditional delivery companies.

Sister chain Taco Bell’s same-store sales rose 5% in the quarter ended March 31. KFC’s same-store sales rose 1% in the U.S. The smaller Habit Burger’s same-store sales rose 3%.

For the company, global same-store sales rose 3% for its combined brands. System sales, which features revenues generated by all restaurants worldwide, rose 8%, largely on the back of 6% unit growth.

David Gibbs, Yum’s CEO, said the sales increased “despite the difficult operating environment.” He noted that the company opened 1,000 locations in the first three months, a record for the company. He also noted that digital sales mix for the company’s four brands now exceeds 40%.

Sales in China weakened in the quarter. KFC sales in the country, its largest market, declined 4%. International same-store sales for the chicken chain increased 4%, but 10% without China’s numbers.

Pizza Hut’s first-quarter decline ended a seven-quarter sales growth streak that put the chain on surer footing. The company had closed hundreds of dine-in units, shifting to delivery and takeout. The pandemic appeared to give the company momentum, sending sales soaring.

On a two-year “stacked” basis, its same-store sales rose 10% in the first quarter, which is a slight increase from the 9% two-year number in the fourth quarter.

Still, the decline came in the same period that rival Domino’s saw its sales worsen, which it largely blamed on the driver shortage that led to shortened store hours in many markets and longer delivery times.

Speaking on the company’s first-quarter earnings call on Wednesday, Yum CEO David Gibbs blamed “capacity constraints” on the chain’s sales challenges, blaming them on “delivery driver shortages felt across the industry.”

Pizza Hut is restoring operating hours, increasing online ordering and working with its overflow call center to help recover sales. The company is also working with third-party delivery companies to augment the chain’s own service, Gibbs said. The company believes that working with services like DoorDash and Uber Eats will generate more sales in the coming quarters.

“We’re excited by the potential growth” of working with aggregators, Gibbs said, noting “outperformance by existing franchisees” that use aggregators, versus those that do not.

UPDATE: This story has been updated to add new information from the second-quarter earnings call.

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