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KFC Transformation Accelerates Sales Growth

KFC Transformation Accelerates Quarter One Sales Growth For Restaurant Brands

Restaurant Brands today announced a 2.6% increase in total sales on the prior year for its first quarter. This increase was driven by the strong sales generated by the KFC transformation strategy and the tenth quarter of growth from Starbucks Coffee. Sales for New Zealand operations were up $2.1 million but sales for Pizza Hut Victoria declined by $200,000. Total sales for the company’s four brands were $74.3 million at the end of the quarter, up $1.9 million on the prior year.

Chief executive, Vicki Salmon, said KFC’s revolutionary brand transformation and strong performance from Starbucks Coffee were the main drivers of total sales growth. Pizza Hut New Zealand was still facing competitive pressures but its new online offering and new marketing campaign sought to combat this.

“KFC has continued to provide fantastic results and these sales demonstrate the success of our transformation strategy. Starbucks Coffee also continues to perform and we have now seen two and half years of continuous sales growth. We are continuing with the disposal of Pizza Hut Victoria and focusing on an aggressive marketing calendar and our new website for Pizza Hut New Zealand.”

KFC delivered another strong quarter of sales growth of 7.0%. The company’s biggest brand, comprising 56% of total sales, produced a sales increase of $2.7 million for the quarter to a total of $41.5 million.

KFC sales were the result of the continuing success of its transformation strategy, improvements in operating standards and three successful product releases – Fillers, Wicked Wings and BBQ Chicken.

Store numbers remained at 88. Nine stores have undergone transformation with a further 10 to be completed this financial year, of which four are underway.

“KFC continues to perform extremely well. The company has focused on transforming the brand, improving operations and revitalising the store menu. We are now seeing the excellent results that can be attributed to this process, with five out of the last six quarters showing positive growth,” said Salmon.

“Store refurbishment will continue and the sales results clearly demonstrate that re-invigorating the brand was the right strategy.”

Pizza Hut New Zealand

The pizza category continues to be competitive in New Zealand and these pressures continue to impact the business. Sales for the quarter declined by $1.4 million to $19.2 million and same store sales declined 10.6% in the quarter. Pizza Hut New Zealand sales account for 26% of Restaurant Brands’ total sales.

“The pizza market continues to be a challenge and we are addressing this with a focused marketing calendar, the re-launch of our website and a number of planned new product releases,” said Salmon.

“Pizza Hut New Zealand is still nearly double the size of its nearest competitor, with 106 stores and Restaurant Brands is committed to improving the sales results for this area of our business.”

Store numbers were 106 at the end of the quarter with one red roof restaurant closing as planned.

Starbucks Coffee

Total sales for Starbucks Coffee in this quarter were $7.0 million, a 13.6% increase on the same quarter last year. Same store sales increased 2.6% - the tenth consecutive quarter of same store sales growth. Starbucks Coffee sales represent 9% of Restaurant Brands’ sales.

“Starbucks Coffee continues to be a solid operator and show quarter on quarter growth. We are excited about bringing new products to the market over the coming months.”

Store numbers remained constant at 44. A new store in Sylvia Park will be opened in June.

Pizza Hut Victoria

The continuing weakness in the Australian pizza market saw the Victorian Pizza Hut business produce sales of $NZ6.6 million for the quarter, down 2.7% on the prior year. Pizza Hut Victoria currently accounts for 9% of Restaurant Brands’ sales.

“Following our decision to sell the Pizza Hut Victoria business in April, we are very pleased with the considerable interest we have seen in the stores from purchasers. We are currently in discussions with interested parties and negotiations are underway.”

Store numbers remained at 50 over the quarter.


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