FILE PHOTO: A Kentucky Fried Chicken (KFC) logo is pictured on a sign in North Miami Beach, Florida, U.S. April 6, 2017. REUTERS/Carlo Allegri
October 30, 2019
(Reuters) – Pizza Hut and KFC parent Yum Brands Inc <YUM.N> reported quarterly profit below market expectations on Wednesday, hurt by poor performance at GrubHub Inc <GRUB.N>, the food delivery platform the restaurant operator bought a stake in a year ago.
Shares of Yum fell 6% before the bell, after the company reported quarterly same-store sales below estimates.
Yum bought a stake in GrubHub last year for $200 million, to increase sales at its KFC and Taco Bell restaurants in the United States through pickup and deliveries.
GrubHub, however, has been battling growing competition from startups such as DoorDash and Uber Technologies’ <UBER.N> Uber Eats, and even forecast slowing revenue growth in its current quarter.
Yum earned 80 cents per share in the third quarter ended Sept. 30, excluding one-time items, 14 cents lower than Wall Street expectations, according to IBES data from Refinitiv.
Net income fell about 44% to $255 million. The company said it recorded $60 million of pre-tax investment expense related to the change in fair value of its investment in Grubhub.
Sales from restaurants open over an year also missed expectations, growing 3% in the third quarter, below the estimate of 3.3% rise.
(Reporting by Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli)
