Tuesday's 2% drop in worldwide same-store sales by Yum Brands (YUM, Financial) surprised analysts who were expecting a relative increase. Sluggishness at KFC, with U.S. sales falling 5% in the third consecutive quarterly loss this year, drove the fall.
Aimed at fighting the fast-food sector's "value wars" led by rivals McDonald's and Burger King, Yum debuted $5 value options under KFC's "Taste of KFC" menu in August featuring an eight-piece chicken nugget pack and a nugget meal bowl. Notwithstanding these initiatives, KFC has had difficulties since consumers value bargains above average menu pricing in the sector.
With U.S. same-store sales growing 4%, Taco Bell stayed a strong point for Yum Brands—the Tex-Mex chain's 11th straight quarter of expansion. Moreover, it's important to note that LSEG data shows that Yum's overall sales fell short of the 0.23% growth projection, highlighting continuous competitive challenges in the fast-food industry.
