Yum Brands on Wednesday reported that global same-store sales fell 7% in the first three months of the year as the coronavirus pandemic closed thousands of its restaurants and weighed on Pizza Hut and KFC's sales.
"Trends have improved significantly as we move through April," CEO David Gibbs said on the conference call.
Shares of the company rose 1% in morning trading.
Here's what the company reported for the quarter ended March 31:
Yum reported fiscal first-quarter net income of $83 million, or 27 cents per share, down from $262 million, or 83 cents per share, a year earlier. The company's minority stake in Grubhub trimmed earnings per share by 6 cents.
Excluding refranchising gains, costs of acquiring Habit Burger Grill and other items, Yum earned 64 cents per share.
Net sales rose 1% to $1.26 billion.
Wall Street anticipated earnings per share of 65 cents on revenue of $1.20 billion, based on a survey of analysts by Refinitiv.
KFC's same-store sales shrank 8% in the quarter. More than a quarter of the fried chicken chain's systemwide sales come from China, where it was forced to close many locations temporarily to slow the spread of the coronavirus. Excluding China, KFC's quarterly same-store sales fell 2%, hit by store closures and shelter-at-home mandates across the world in March.
Pizza Hut, the laggard of Yum's portfolio, reported even steeper same-store sales declines of 11% as sales in the U.S. and China fell. Excluding China, Pizza Hut's same-store sales fell 5% in the quarter. The crisis has helped Pizza Hut grow its digital and delivery sales, a long-term goal of the brand as it shies away from its reputation as a dine-in pizzeria.
"This three-month period we're in right now, basically, we're gonna have three years worth of changes in our business, and it's accelerating our plan for Pizza Hut," Gibbs said.
Yum China, which was spun off in 2016, said on Tuesday that the decline in same-store sales is slowing as consumers in China adjust to a new normal. The KFC and Pizza Hut licensee, which led the transition to contactless delivery, said that about 99% of its stores in China are either partially or fully open.
Taco Bell was the only brand to report positive same-store sales growth during the quarter. In mid-March, the chain began offering only drive-thru service, with takeout allowed if the location did not have a drive-thru lane. Some restaurants began opening later, effectively removing breakfast from the menu.
At one point, 11,000 Yum locations were closed due to the pandemic, representing more than a fifth of its total restaurant base. Executives said that restaurants are slowly reopening, but about 10,000 locations are still temporarily shuttered.
The company is giving some franchisees grace periods for certain near-term payments, along with other financial assistance if needed. U.S. franchisees will also be allowed to defer all 2020 capital obligations for remodels and new unit development through the end of the year.
Yum had $1.15 billion in cash and cash equivalents on hand as of March 31. The company sold $600 million in bonds, but the cash was not received until April 1. Like many others, the company has suspended stock buybacks to preserve liquidity.
"We feel like we're in a really good position given the moves that we've made," CFO Chris Turner said.