(Reuters) -Yum Brands missed analysts’ estimates for second-quarter comparable sales and profit on Tuesday, hit by higher ingredient costs and muted demand that weighed on its businesses, including Taco Bell, sending its shares down about 2% before the bell.
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 second quarter from 5% a year earlier.
“Consumers haven’t stopped dining out, but they’ve become more selective, chasing value-driven experiences that deliver more bang for their buck,” said Zak Stambor, analyst with eMarketer.
Among other restaurant chains, Chipotle Mexican Grill cut its annual sales growth forecast and missed quarterly sales estimates on weak demand. Burger giant McDonald’s, which is set to report results on Wednesday, warned of tough conditions in May on tariff uncertainty.
The Trump administration’s unpredictable trade policies have also made it harder for businesses to plan operations, disrupted supply chains and increased costs.
Yum’s 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 increased advertising and promotional expenses as well as still-high input costs.
Total costs and expenses during the quarter were up 13%.
The company, which appointed insider Chris Turner as CEO in June, reported revenue of $1.93 billion, compared with the estimate of $1.94 billion.
It reiterated its long-term annual core operating profit growth of 8% for the second time.
(Reporting by Anuja Bharat Mistry and Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar)
