By Anuja Bharat Mistry
(Reuters) -Yum Brands missed analysts’ estimates for the second quarter on Tuesday, hit by higher ingredient costs and muted demand that weighed on its businesses, including Taco Bell, sending its shares down 4%.
Concerns over the impact of steep tariffs and economic growth have dented U.S. consumer spending on eating out, prompting fast-food chains, including Yum Brands, McDonald’s and Burger King-owner Restaurant Brands, to launch budget-friendly meal deals to boost foot traffic.
Taco Bell, which accounts for 38% of the company’s total revenue, rolled out meal boxes ranging from $5 to $9. Still, its same-store sales growth in the U.S. — the biggest market — slowed to 4% during the quarter from 5% a year earlier.
Among other restaurant chains, Chipotle Mexican Grill cut its annual sales forecast and missed quarterly sales estimates on weak demand. McDonald’s, set to report results on Wednesday, also warned of tough conditions in May on tariff uncertainty.
“With rising concerns over tariffs and a weakening labor market, consumers are thinking twice about where and when they eat out … chasing value-driven experiences that deliver more bang for their buck,” said Zak Stambor, analyst with eMarketer.
The Trump administration’s unpredictable trade policies have also made it harder for businesses to plan operations, disrupted supply chains and increased costs.
Yum expects inflation pressures across several key building products sourced from Mexico and Canada for the rest of the year, incoming CEO Chris Turner said on post-earnings call.
Its worldwide same-store sales rose 2% during the quarter ended June 30, while analysts estimated a 2.37% increase, according to data compiled by LSEG.
Excluding items, it earned $1.44 per share, missing the estimate of $1.46 per share, owing to higher advertising spending and elevated input costs.
Total costs and expenses during the quarter were up 13%.
The company, which also owns KFC and Pizza Hut, reported revenue of $1.93 billion, compared with the estimate of $1.94 billion.
(Reporting by Anuja Bharat Mistry and Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar)
