Jul. 30, 2014, 4:47 PM
- YUM states it has seen "a significant, negative impact to same-store sales at both KFC and Pizza Hut in China over the past 10 days" due to an undercover report regarding the practices of food supplier Shanghai Husi (a division of OSI Group). (8-K)
- The report alleged OSI sold chicken and beef beyond its expiration date, among other things. Yum has already cut ties with OSI over the scandal.
- Yum, whose Chinese sales had been recovering after getting clobbered last year by avian flu-related issues, says it's "too early to know how quickly sales will rebound in China."
Jul. 25, 2014, 7:59 AM
- McDonald's (NYSE:MCD) says it will stop selling all chicken products produced in China to its Japan outlets and stop selling chicken nuggets and other items in Hong Kong after reports earlier this week that a Chinese food supplier may have shipped expired meat.
- In Japan, MCD will import all its chicken products from Thailand, which already was supplying 62% of MCD Japan's chicken product imports, with China supplying the remainder.
- The food safety scare in China also has ensnared KFC parent Yum Brands (NYSE:YUM), which has required all its KFC and Pizza Hut restaurants to seal up and stop using all meat materials supplied by the Chinese Husi factory.
Jul. 23, 2014, 3:43 PM
- "Yum China (YUM +0.1%) has decided to immediately terminate all procurement from OSI China," says the company in a statement which notes OSI is not a major supplier to its Chinese division. "It is difficult to believe and completely unacceptable that the management of Shanghai Husi, a division of OSI, would oversee and organize illegal and dishonest operations."
- Shanghai police earlier detained five people connected to the factory at the center of this new food safety scandal, including the head of Shanghai Husi and its quality manager.
- Previously: Yum, McDonald's ensnared in another China food safety scandal
Jul. 22, 2014, 7:49 AM
- The latest food scandal in China is spreading fast, dragging in Starbucks (NASDAQ:SBUX), Burger King (NYSE:BKW) and others, as well as McDonald’s (NYSE:MCD) products as far away as Japan.
- SBUX says some of its cafes previously sold products containing chicken originally sourced from a firm that was shut down Sunday by local regulators for using expired meat and picking up meat from the floor to add to the mix.
- BKW and Papa John's (NASDAQ:PZZA) say they have stopped using food products supplied by the closed firm.
- McDonald’s and KFC parent Yum Brands (NYSE:YUM) apologized yesterday to Chinese customers after discovering the firm supplied expired meat to the two chains.
Jul. 21, 2014, 7:49 AM
- Yum Brands (NYSE:YUM) and McDonald's (NYSE:MCD) face a new food safety scare in China, having suspended orders from a Shanghai meat supplier while Chinese authorities investigate allegations that the company sold expired chicken and beef products.
- YUM and MCD apologized to customers following a TV report that showed workers picking up meat from a factory floor, as well as mixing meat beyond its expiration date with fresh meat.
- YUM has just begun to bounce back from the 2012 scare in its no. 1 market, while MCD says it may now face a product shortfall in its third-biggest market by store numbers.
- YUM -1.8% premarket; MCD -1%.
Jul. 17, 2014, 10:17 AM
- Executives with Yum Brands (YUM -4.7%) faced rapid-fire questions on the restaurant operator's mixed results during a conference call this morning.
- The KFC brand in China is being revamped with a shift in marketing toward higher-priced items. Don't focus on transaction count, says management. The brand dynamics are on the rise, although some caution on 2H is thrown out.
- There's no enthusiasm rendered over a question on the separation of Pizza Hut, although execs are pretty pointed that the performance of the brand in the U.S. has been disappointing. New initiatives in Q4 should help stoke growth at Pizza Hut.
- The breakfast initiative at Taco Bell is said to already be at a break-even point.
- The key takeaway from the call is that the company still sees double-digit EPS growth next year and beyond.
- Earnings call webcast
Jul. 16, 2014, 5:30 PM
- YUM's worldwide system sales rose 6% Y/Y in Q2, better than Q1's 4% growth. Restaurant margin rose 300 bps to 15.5%.
- China division sales (clobbered last year by avian flu issues) +21% vs. +15% in Q1. Same-store sales +15%, unit growth +7%.
- KFC division sales +5%, same-store +2%. Pizza Hut division -1%, same-store -3%. Taco Bell division +3%, same-store +2%. India division +18%, with 25% unit growth more than offsetting a 2% same-store drop.
- Yum still plans to open at least 700 new restaurants in China, and 1,250 in other foreign markets. The company is "taking significant actions" to improve the performance of its U.S. Pizza Hut ops (previous).
- China division restaurant margin jumped 620 bps to 16.8%, while the Pizza Hut division's restaurant margin fell 640 bps to 7.2%. Taco Bell's restaurant margin fell 270 bps to 17.7%, and KFC's rose 30 bps to 12.9%.
- $346M has been spent on buybacks YTD, up from $170M at the time of the Q1 report.
- YUM -2.5% AH. Q2 results, PR.
Jul. 16, 2014, 4:11 PM
Jul. 15, 2014, 5:35 PM
Jul. 14, 2014, 11:14 AM
- Pizza Hut (NYSE:YUM) plans to offer more Hershey-branded dessert products on its menu as it plays catch-up with peers that saw cookie sales boost margins.
- The Pizza Hut brand has struggled to keep up in the U.S. this year with its same-store sales decline of 5% in Q1 looking anemic compared to the 9.6% comp Papa John's churned up over the same period.
Jul. 11, 2014, 11:35 AM
- Taco Bell (YUM) plans to update its Cantina Bell menu next week with more meat-heavy options and new protein items such as Greek yogurt.
- Incoming CEO Brian Niccol says the changes are being made in part to appeal to Millennials.
- The Cantina Bell menu hasn't dented the momentum at Chipotle (CMG -0.3%) as some CMG skeptics forecast it would.
Jul. 2, 2014, 9:05 AM
- Fast-food consumers value quality to a larger degree than price, according to a new survey from Consumer Reports.
- The publication calls the results a "wake-up call" for the industry.
- In-N-Out Burger, The Habit Burger Grill, and Culver's ranked at the top of a list based on food quality, value, and customer service.
- McDonald's (MCD) didn't crack the top 20 for hamburger chains - while Taco Bell (YUM) only managed a #8 ranking in the Mexican fast-food category.
- Papa Murphy's (FRSH) took down the top spot for pizza chains.
Jul. 1, 2014, 12:06 PM
- Restaurant operators in California are expected to increase prices to counterbalance an increase in the minimum wage in the state which takes effect today,
- The minimum hourly wage goes to $9 from $8 as an incremental step in a plan to take it to $10 per hour by 2016.
- Fast-food stocks: MCD, BKW, WEN, JACK, YUM, SONC, PLKI
Jun. 17, 2014, 7:52 AM
- Count IMF Managing Director Christine Lagarde as another proponent of raising the federal minimum wage in the U.S.
- Lagarde points to the 50M working Americans living below the poverty level in making her claim that "we" have to do something about it.
- Legislation on a minimum wage increase has been stalled in Congress, but is likely to be teed up as mid-term election issue.
- Related stocks: MCD, BKW, SONC, DENN, WMT, JACK, GTIM, WEN, TAST, PLKI, PZZA, YUM, NATH, CKEC, AMC, RGC.
- Bloomberg Lagarde interview
Jun. 9, 2014, 1:46 PM
- Data from NPD Group indicates the average American spends 12 minutes a day on breakfast.
- The highly-contested daypart pits major cereal sellers such as Kellogg (K), Post Holding (POST), and General Mills (GIS) against fast-food chains like McDonald's (MCD), Starbucks (SBUX), Taco Bell (YUM), and Dunkin' Brands (DNKN).
- Convenience-store chains are also a major factor as C-stores such as Circle K (ANCUF), 7-11, Pantry (PTRY), BP Connect (BP), On the Run (XOM), Speedway America (MPC), Kwik Shop (KR), and Qwiktrip continue to innovate and show some positive growth trends.
- What to watch: Analysis from Edward D. Jones suggests consumers tend to stay with their routines. The read is that companies in the breakfast business need to compete for market share within their segment - instead of trying to change consumer behavior. Taco Bell is utilizing that strategy with its marketing message which paints McDonald's as old-fashioned.
Jun. 9, 2014, 8:22 AM
- Some restaurant sector analysts think Taco Bell's (YUM) aggressive breakfast push has cut into McDonald's (MCD) breakfast market share to slow overall growth trends for the company in the U.S.
- Though execs with McDonald's cited "ongoing broad-based challenges" as a drag on U.S. sales, the relentless marketing push by Taco Bell to younger consumers could be aging the brand.
- MCD -0.2% premarket
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