RJ Hottovy Throws Light On Yum! Brands, Inc. (YUM) Backed Pizza Hut’s China Challenges

In an aftermarket hours program segment on CNBC, RJ Hottovy, who serves as the Global Director of Consumer Equity Research at Morningstar about the rising concerns among the investor communities about quick service restaurant major Yum! Brands, Inc. (NYSE:YUM) promoted business unit Pizza Hut’s China operations, after the Chinese unit reported “disappointing quarterly sales”.

“Pizza has had softness not only in the U.S market but also in the Chinese market where Pizza casual dining is a nice story for them, even with the poultry issues last year, going from an 8% cost to flat cost in the first half of last year,” Hottovy said.

Looking ahead, he went on to elaborate that “questions could be raised and spark concerns about the Chinese consumer,” since “both in U.S and China the Pizza Hut story is a bit of concern in market tonight.”

These comments from Mr. Hottovy, came on the back of Yum! Brands, Inc. (NYSE:YUM) brands reporting yesterday that its 2Q profit were up 19% to $334 million, largely driven by jump in overall sales in China for the second quarter. Mr. Hottovy pointed out that, the “KFC brand is making a good bounce back in China”, thanks to menu revamp which has found traction with the Chinese consumers.

Same store sales for Yum! Brands, Inc. (NYSE:YUM) in China during 2Q, was up 15 percent as against the 20 percent dip in sales, the firm which operates such house hold brands like, “KFC, Pizza Hut and Taco Bell” had reported in 2Q of last year. Yesterday, the company had reported that it is all set to open 700 new restaurants in China over the next few quarters as per their China expansion plans.

Disclosure: none