The restaurant holding group Yum! Brands (YUM) , which is the parent company of KFC and Taco Bell, issued its third quarter earnings report after the bell on Tuesday, and they were a big disappointment. The company, which owns fast food locations around the world, revealed that sales slipped in China far more than estimated, which contributed to Yum falling short of overall revenue projections.
Yum reported a same-store drop of 11 percent in China, where the company does over half of their business. While they experienced an increased presence in emerging markets, sales were flat in the US, and operating profit in China fell 14 percent.
In China alone, Yum owns 4,463 KFC franchise locations to go along with 953 Pizza Hut Casual Dining and 185 Home Delivery units. Sales in that country were severely affected by a bird flu scare.
The company’s acquisition of Little Sheep was of further concern for Yum. The Mongolian “hot pot” restaurant chain came under Yum’s control in 2012, and since then has lost significant amount of money. Yum reported a special $258 million net impairment from the acquisition of Little Sheep.
For their third quarter 2013 earnings report, Yum! Brands reported a net gain of $152 million, or $0.85 per share, versus the net gain of $471 million, or $0.99 per share, from the same period a year ago. Revenue for the quarter was $3.46 billion, as compared to $3.6 billion from the previous year. Analysts were expecting a net gain of $0.93 per share on revenues of $3.53 billion.