By Aishwarya Venugopal
(Reuters) - Yum Brands Inc's (N:YUM) sales at established outlets rose at just half the pace expected by Wall Street, as its KFC and Pizza Hut chains struggled to attract enough diners in a fiercely competitive restaurant industry.
Competition between restaurants has intensified as Yum, McDonald's Corp (N:MCD) and Domino's Pizza Inc (N:DPZ) pull out all the stops to lure diners with dollar menus, discounts and new breakfast items as consumers increasingly spend less on processed food and eating out.
Yum shares fell 5 percent in premarket trading on Wednesday after results showed sales at restaurants open at least a year rose 1 percent in the three months ended March 31, compared with the 2 percent expected by analysts, according to Thomson Reuters I/B/E/S.
The results also contrasted stronger-than-expected quarterly sales from McDonald's and Domino's over the past week, indicating that Louisville, Kentucky-based Yum may have lost market share to rivals.
Same-restaurant sales at KFC rose 2 percent in the first quarter of 2018, the slowest growth rate in four quarters. The fried chicken outlet's U.S. same-restaurant sales were unchanged.
On a conference call with analysts, Yum executives said KFC would have recorded a 3 percent growth in same-restaurant sales had it not been for supply chain issues in the United Kingdom.
Yum was forced to shut hundreds of British KFC outlets in February due to a shortage of chicken resulting from the abrupt change of a supplier.
Pizza Hut also missed expectations for same-restaurant sales, which rose a lower-than-expected 1 percent worldwide, reflecting a 2 percent decline in overseas markets.
Overall revenue at Yum fell 3 percent to $1.37 billion (1 billion pounds) but topped estimates of $1.09 billion, thanks to stronger sales at Taco Bell.
Net income jumped to $433 million from $280 million last year, reflecting gains from the sale of company-owned restaurants to franchisees.
Excluding one-time items, Yum earned 90 cents per share, ahead of expectations of 68 cents.