(Bloomberg) -- Yum! Brands Inc.’s sales fell more than expected in the third quarter, with growth at Taco Bell unable to offset ongoing softness at Pizza Hut and KFC.
Taco Bell’s comparable sales rose 4%, outpacing expectations. But the company’s overall performance in that metric declined 2%, deeper than the average analyst estimate. Yum pointed to weak consumer sentiment and geopolitical tensions, including in the Middle East, as the root of the challenges.
Yum is the latest restaurant operator to illustrate the difficulty of enticing budget-conscious consumers to dine out. Chains such as McDonald’s Corp. have made progress in reversing traffic declines in the US, but the picture remains bleak across the industry.
The company’s shares were little changed at 9:39 a.m. in New York. Yum’s stock had gained 1.6% this year through Monday’s close, well below the S&P 500’s 20% increase.
The company’s target of increasing locations by 5% is at risk because it’s closing some locations in the Middle East due to the war, Chief Executive Officer David Gibbs said in a call with analysts. Yum still expects Taco Bell’s growth to continue into the fourth quarter.
Restaurant Brands International Inc., the owner of Burger King, Popeyes and Tim Hortons, also missed sales expectations on Tuesday.
Taco Bell has broken through with US diners by offering a mix of value offerings, including a $7 “cravings box,” and full-priced offerings including cheesy chalupas. But Yum’s other brands have struggled to gain traction.
(Updates with shares in fourth paragraph, location growth in fifth paragraph. Previous version corrected spelling of Popeyes brand.)
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