KFC drags down Yum China's May same-store sales

Yum! Brands Inc.’s KFC chain in China continues to hamper performance in that country’s system of more than 5,400 restaurants.

Yum’s May same-store sales in China decreased 19 percent, the company indicated in a filing with the Securities and Exchange Commission.

KFC same-store sales in China — Yum China’s largest brand at nearly 4,400 units — declined an estimated 25 percent, more than offsetting a gain of 12 percent at Pizza Hut Casual Dining, which has slightly fewer than 1,000 locations in China.

As it has stated previously, the company expects negative publicity surrounding this year’s avian-influenza outbreak in China to dissipate and allow for a return to same-store sales growth by the end of the year.

“The impact of prior instances of avian flu in China has been short-lived, and based on current trends, we believe this will again be the case,” the company said in the filing. “We expect that KFC China same-store sales will continue to recover over the course of the year and be positive in the fourth quarter.”

For the China division’s second quarter, which comprises March, April and May, Yum estimates a same-store sales decline of 20 percent. That includes a decrease of 26 percent for KFC, offsetting about a 7-percent increase for Pizza Hut Casual Dining.

Taking into account Yum’s results filed with the SEC and other management commentary at a recent investor confidence, securities analyst Bryan Elliott of Raymond James & Associates wrote in a research note that Yum’s projections for sales recovery fall in line with investors’ consensus. “Our view remains unchanged that many investors share management’s very high degree of confidence that China comps will turn positive later this year and increase sharply into 2014, as if 2013 never occurred,” Elliott wrote.

In addition to KFC and Pizza Hut Casual Dining, Yum’s China division also operates several hundred combined outlets of Pizza Hut Home Service, East Dawning and Little Sheep.

Louisville, Ky.-based Yum! Brands Inc. operates or franchises more than 39,000 KFC, Pizza Hut and Taco Bell units in more than 130 countries.