Yum Brands expects to shutter approximately 250 Pizza Hut stores, as the chain’s weak performance continued to dampen the company’s results in the fourth quarter.
Ranjith Roy, CFO of Yum Brands, said during the Q4 earnings call that the closures, expected to take place in this year’s first half, would target underperforming units in the US.
Roy noted that the affected stores account for “a very small portion” of the estimated 20,000 units that Pizza Hut has globally. The company did not reveal the exact number of stores Pizza Hut has in the US, but Restaurant Dive estimates that the closures would affect about 4 per cent of the chain’s network in the market.
The plan is part of a program named ‘Hut Forward’, which also includes other initiatives such as investment in marketing to help turn around the chain.
This comes as Pizza Hut saw a 5 per cent decline in system sales and 1 per cent drop in same-store sales for the fourth quarter. The US market, which accounts for 40 per cent of the division’s total sales, recorded an 11 per cent drop.
Excluding currency exchange and the lapping 53rd week, the chain’s sales were down 2 per cent, with US sales down 6 per cent.
In November, Yum Brands began reviewing strategic options for Pizza Hut, which it said could lead to a sale of the business.
Yum Brands CEO Chris Turner said on the earnings call that the review is continuing as planned and is expected to be complete this year, but did not share further details.
Taco Bell leads growth
For the quarter ended December 31, Yum Brands’ worldwide system sales grew 2 per cent.
Excluding currency exchange and the lapping 53rd week, worldwide system sales increased 5 per cent, driven by an 8 per cent growth at Taco Bell and a 6 per cent uplift at KFC.
“Yum! delivered another year of outstanding results at KFC and Taco Bell with our fundamentals stronger than ever at both brands,” said Turner
“Taco Bell again gained market share with standout same-store sales performance, and KFC delivered another record-breaking year of unit development,” he added.
On the bottom line, net income grew 26 per cent to $533 million during the quarter.
For the full year, the company’s worldwide system sales rose 5 per cent, and net income improved 5 per cent to $1.55 billion.
