Burger King and KFC logos.
Credit: Reuters Photos
Burger King parent Restaurant Brands and KFC owner Yum Brands missed market estimates for quarterly results on Tuesday, hit by weak demand in the United States and abroad from budget-stretched customers.
Consumers are relying on cheaper, home-cooked meals instead of eating out as fast-food prices have risen over the past year, hurting traffic across the industry.
As a result, restaurant operators have turned to aggressive promotions in an attempt to attract value-seeking customers. Burger King and KFC launched $5 value meals to get lower-income customers back into their outlets.
Still, Burger King sales declined 0.7 per cent in the quarter ended Sept. 30, compared with a 6.6 per cent rise last year. KFC's same-store sales in the U.S. tumbled 5 per cent, marking the third straight quarter of declines this year.
The companies also joined burger giant McDonald's in flagging weakness in international markets such as the Middle East.
Yum Brands, which also owns Pizza Hut and Taco Bell, saw worldwide same-store sales decline 2 per cent, while Popeyes parent Restaurant Brands reported a comparable sales rise of only 1.8 per cent for its international segment, compared with 7.7 per cent last year.
Toronto, Canada-based Restaurant Brands earned 93 cents per share on an adjusted basis, missing analysts' estimates of 95 cents, according to data compiled by LSEG. Excluding items, Yum logged a profit of $1.37 per share, missing expectations of $1.41.
U.S.-listed shares of Restaurant Brands were down about 2per cent before the bell on Tuesday, while Yum was flat.