Yum! Brands’ Same-Store Sales Growth was Negative in China
Analyzing Yum! Brands' Performance in 1Q15 and Its 2015 Outlook (Part 2 of 5)
Same-store sales
In the last part of this series, we learned that Yum! Brands’ (YUM) EPS (earnings per share) grew 21% YoY (year-over-year). To understand the growth in EPS, we’ll look at the same-store sales growth. It’s one of the revenue drivers. Yum! Brands (YUM) reports its earnings for five segments—China, India, KFC (Kentucky Fried Chicken), Pizza Hut, and Taco Bell.
China
In the above chart, you can see that China’s same-store sales growth was -12% in 1Q15—compared to 9% growth a year ago. This directly impacted the division’s revenue growth. It fell 8.9% YoY. China generates 47% of Yum! Brands’ revenue.
Yum! Brands’ China division consists of four brands—KFC, Pizza Hut, Little Sheep, and East Dawning. KFC has the highest presence for Yum! Brands in China. The disappointing performance in China was due to the meat supplier scandal. It impacted sales in China. The effects lingered in the first quarter as well.
KFC
Sales outside KFC China and India fall under the KFC division. Same-store sales for KFC US and the International division—excluding China and India—grew 5% compared to 1% in the same quarter last year. The KFC division generates 24% of Yum! Brands’ revenue.
Taco Bell
Taco Bell’s same-store sales grew 6%—compared to -1% in the same quarter last year. Taco Bell generates 16% of Yum! Brands’ revenue.
Pizza Hut
Same-store sales growth for Pizza Hut US and the International division improved slightly from -2% to -1% YoY. Pizza Hut generates 10% of Yum! Brands’ revenue.
India division
Yum! Brands’ India division also had negative same-store sales growth. It was -11% in 1Q15—compared to -1% in 1Q14. The India division consists of three brands—KFC, Pizza Hut, and Taco Bell. It generates about 1% of Yum! Brands’ revenue.
Why same-store sales is important
Same-store sales and unit growth are two key revenue drivers for restaurant stocks like McDonald’s (MCD), Chipotle Mexican Grill (CMG), and Bloomin’ Brands (BLMN). These stocks are included in the Consumer Discretionary Select Sector SPDR ETF (XLY). XLY holds 1% of Chipotle Mexican Grill and 4% of McDonald’s.
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