Taco Bell and KFC feeling pressure from price-conscious consumers

Jordan Valinsky, CNN | 2/7/2024, 7:49 a.m.
Taco Bell, KFC and Pizza Hut’s parent company is facing the same problem as its rivals: Fast food is getting ...
A Taco Bell restaurant in New York. Mandatory Credit: Michael Nagle/Bloomberg/Getty Images

Taco Bell, KFC and Pizza Hut’s parent company is facing the same problem as its rivals: Fast food is getting too expensive and consumers are pushing back.

Yum Brands, which owns all three chains, reported Wednesday weaker-than-expected sales in the fourth quarter. That sent shares nearly 3% lower in premarket trading.

In particular, Taco Bell, typically the company’s most popular chain, reported sales at restaurants open at least a year grew 3% for the quarter — a steep decline from the 11% growth it registered for the same quarter a year earlier when a revamped breakfast menu fueled sales.

Meanwhile, Pizza Hut’s US sales slid 4% in fourth quarter and KFC sales were flat, with both brands’ numbers also coming in below analysts’ expectations. In total, same-store sales at all three chains plus Habit Burger rose 1% in quarter, missing analysts’ estimates of a 3.9% increase.

The company didn’t directly mention if the war in Israel or protests against American brands impacted its bottom line, but KFC’s Middle East unit saw its sales decline 5% for the quarter, and Pizza Hut’s slid 3%.

Yum Brands is the third fast food company to report a disappointing earnings report as consumers more closely examine where they’re spending money.

Part of the problem: Although grocery prices are still high, they rose just 1.3% overall in 2023, compared to dining out, which surged 5.2%, according to the latest Consumer Price Index report. That’s putting pressure on lower-income consumers, a vital base for fast food chains.