Taco Bell-parent Yum Brands misses profit estimates as promotions weigh

3 weeks ago 24

May 3 (Reuters) - Yum Brands Inc (YUM.N) fell short of Wall Street estimates for first-quarter profit on Wednesday, as the Taco Bell parent doubled down on promotions to attract inflation-hit consumers even as cost pressures lingered.

Shares dropped about 4% in premarket trading, despite the Louisville, Kentucky-based company topping quarterly same-store sales estimates.

Yum Brands has banked on aggressive promotional offers and value meal deals launches across its chains after a slowdown in demand last year, particularly from its lower-income customer base.

While those promotions - including Taco Bell's $2 burritos and KFC's $5 Mac & Cheese bowls - have drawn in consumers, they have pinched the company's profits at a time when cost pressures tied to labor and raw materials persist.

Yum Brands said its net income fell to $300 million, or $1.05 per share, in the first quarter ended March 31, from $399 million, or $1.36 per share, a year earlier.

On an adjusted basis, the Pizza Hut owner earned $1.06 per share, missing estimates of $1.13, according to Refinitiv IBES data.

Total same-store sales rose 8% in the first quarter, beating estimates of a 5.45% increase, with all three of Yum's major chains reporting better-than-expected comparable sales.

The company's downbeat profit contrasts with its peers including McDonald's Corp (MCD.N), Burger King parent Restaurant Brands (QSR.TO) and Chipotle Mexican Grill (CMG.N), which topped results estimates in recent weeks.

Reporting by Deborah Sophia in Bengaluru; Editing by Shounak Dasgupta

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