Restaurant Brands annual sales rise 8% on KFC, Carl's Jr., Starbucks; Pizza Hut falls

Thursday 10th March 2016

Restaurant Brands New Zealand's annual sales rose almost 8 percent led by KFC, Carl's Jr. and Starbucks, while revenue from Pizza Hut fell.

Sales across all stores for the year ended Feb. 29 climbed 7.8 percent to $387.6 million, the Auckland-based company said in a statement.

Full year 2015 had 53 trading weeks rather than 52. With 2015's result adjusted to exclude the 53rd week of trading, Restaurant Brands' annual sales rose 9.9 percent in the latest year.

KFC's annual sales of $282.5 million, were up 6.6 percent on 2015. Restaurant Brands had 91 KFC stores at the end of the fourth quarter, unchanged from the third quarter, and sales rose 6.3 percent over the year on a same-store basis.

"Successful promotions in the quarter were the return of the popular Festive Meal family buckets and the bacon & avocado burger," Restaurant Brands said.

Earlier this month, Restaurant Brands bought New South Wales' KFC fried chicken franchise for A$82.4 million in cash and scrip. It now owns 42 KFC stores in NSW, and the expanded company is expected to generate annual revenue of $500 million.

The acquisition will add transaction costs of $1 million to Restaurant Brands' 2016 results before contributing to the company's earnings from the second quarter of the 2017 financial year.

Carl's Jr saw annual sales up 66 percent to $33.4 million, which Restaurant Brands said was driven by an increase in store numbers. Same-store sales fell 5.1 percent to $18.4 million on an annual basis.

One new Carl's Jr. opened in the quarter, with 18 stores open as of Feb. 29. Another has since opened at Christchurch's Church Corner, and the company plans to open another store in the city in April.

"The brand is building awareness and customer loyalty across the network," Restaurant Brands said. "Total Carl’s Jr. sales for the quarter were $7.4 million, an increase of 5.8 percent on the equivalent 12-week period last year, with the impact of new stores in the prior year trading for a full quarter. The brand [is] showing positive growth for some stores and other stores still rolling over high opening period sales."

Starbucks sales rose 2.9 percent to $26.8 million over the year, though same-store sales gained 6.9 percent to $26.7 million.

One Starbucks closed over the quarter - Wellington's Courtenay Place store - bringing the number of stores down to 25.

"The brand continues to see growth in sales driven by better value and improved customer experience initiatives implemented over the past two years," Restaurant Brands said.

Pizza Hut struggled to bring in the dough, with full-year sales down 7.2 percent to $44.9 million. It had 39 Pizza Huts at year end, seven fewer than the year earlier period as it sells lower volume and regional stores to independent franchisees, it said.

Same-store sales rose 2.6 percent over the year, and 8.8 percent in the quarter, with the recent growth attributable to a new mobile-friendly website and revised menu, Restaurant Brands said.

The company will announce its full-year profit on April 14.

The NZX-listed shares rose 1.1 percent to $4.60 shortly after the market opened, and have gained 2.5 percent this year. The stock is rated an average 'hold' based on three analyst recommendations compiled by Reuters, with a median price target of $4.60.

BusinessDesk.co.nz

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