Yum Brands reported a wider-than-expected fall in quarterly same-store sales at its Taco Bell business, after a multistate cyclosporiasis outbreak in the US during the quarter made customers wary of dining out at the Tex-Mex chain.
A 20% drop in weekly foot traffic at Taco Bell outlets was seen at the peak of the outbreak in early July, according to data firm Placer.ai.
US health authorities last month declared the outbreak, which resulted in 570 hospitalizations and two deaths, was over.
"Since the
end of September, Taco Bell U.S. has been outpacing the quick service restaurant industry on same-store sales growth," CEO Chris Turner said.
Fast food chains are also competing aggressively for customers as higher living costs push budget-conscious consumers toward cheaper home-cooked meals, while higher earners also turn away in favor of fine dining.
Taco Bell's same-store sales fell 4% in the third quarter, missing analysts' expectations of a 0.9% drop, according to data compiled by LSEG.
Overall, same-store sales at Yum Brands were flat compared to a year earlier, and short of analysts' estimates of a 0.9% rise. Same-store sales at KFC, the biggest Yum unit, rose 1% compared with expectations of a 2.1% rise.
Yum's operating profit for the quarter grew to $2.32 billion from $666 million a year earlier due to a $1.68 billion gain from the divestiture of its Pizza Hut chain in a $2.7 billion deal earlier this year.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Shinjini Ganguli)
