KFC UK sales fall as inflation crisis bites

The UK arm of fast food group Yum! Brands was hit harder by inflation than other markets last quarter, resulting in a drop in sales for KFC.

While overall in Europe – excluding the United Kingdom – KFC’s system sales grew 25% during the third quarter, in the UK specifically they declined 7% year on year.

Yum! Brands chief financial officer Chris Turner told investors on an earnings call today (2 November) the UK was “a little bit of a different story” to the rest of Europe, adding the cost of energy is “more pronounced” in the country compared to others.

“It’s the same thing in the Pizza Hut business, [it’s] strong in other parts with the UK a bit more impacted,” Turner commented.

He explained Yum! Brands is working closely with its franchisees to set commercial plans “to help navigate those inflationary challenges”.

Overall Yum! Brands saw its worldwide system sales grow 7% in the third quarter, with 5% same-store sales growth and 4% unit growth. KFC saw its sales increase by 8% in the quarter, Taco Bell by 9% and Pizza Hut by 4%. The business made reported digital sales of approximately $6bn (£5.22bn), with the digital mix exceeding 40%.

CEO David Gibbs said the business is “particularly thrilled” by the performance of its Taco Bell and KFC brands, which are “driving transactional growth through an omnichannel approach”.

In the UK, Taco Bell has reached the milestone of opening its 100th branch.

A key focus for this business has been to provide our customers with the ability to access our brands wherever they are.

David Gibbs, Yum! Brands

“Taco Bell is winning thanks to its ability to generate and amplify standout moments in culture,” said Gibbs.

In an environment where consumers globally are increasingly cost-conscious, the company claims the Mexican fast-food brand is delivering value on both its premium and entry-level offerings. Gibbs gave examples of the team adding items to its $2 Cravings Menu (a version of which is available in the UK offering products for as little as £1).

Other examples cited of how the business is offering value to consumers include Pizza Hut’s ‘My Box’ offering and the return of KFC’s $5 Mac & Cheese bowl in the US.

In addition to driving value, improving delivery capabilities has been a big focus for the business.

“A key focus for this business has been to provide our customers with the ability to access our brands wherever they are,” said Gibbs.

The company has been working with third party aggregators and integrating them into its point-of-sales systems. Around 90% of the organisation’s systems now use at least one third-party aggregator.

Investing in the business

During the call, Yum! Brands reaffirmed its commitment to investing in the business as one of its key priorities. Gibbs added that previous marketing investments were paying off.

“The investments we have made in areas such as consumer insight, marketing analytics and new technology platforms allow us to act with pace and competence to meet the needs of consumers around the world,” he said.

Last year the Yum! Brands acquired AI consumer data firm Kvantum. The company’s media optimisation platform has now rolled out across 60 countries, covering 60% of total system sales. The platform is helping the business to “make smarter decisions”, Gibbs claimed.

He pointed to Pizza Hut Australia, which has seen a double digit increase in return on media spend after deploying the platform.