Falling pizza sales eat into Restaurant Brands result

Store improvements had helped push up profit at KFC outlets.

The continued recovery of KFC helped drive a $1.9 million rise in the first-quarter sales of Restaurant Brands but its pizza sales still lag in the competitive market.

The fast-food company, which holds the New Zealand franchises for KFC, Pizza Hut and Starbucks Coffee, said sales for the three months to May 22 rose $1.9 million or 2.6 per cent to $74.3 million compared with $72.4 million a year earlier.

The strength of its largest business, KFC - which has continued recovering from poor sales in 2003 - was offsetting the lower-than-expected returns from Pizza Hut New Zealand. Sales at the pizza chain dropped $1.4 million to $19.2 million for the quarter, or 10.6 per cent on a same-store basis, amid tight trading conditions.

With KFC sales rising $2.7 million over the quarter to $41.4 million, the chicken chain contributed 56 per cent of total sales. That amount is 7 per cent ahead of the prior year and 5.8 per cent ahead on a same-store sales basis.

The company said new product releases such as Fillers, Wicked Wings and BBQ Chicken helped drive the improvement as well as more store transformations and continuing efficiency gains. It was hoped a new brand campaign, an upgraded website and new product releases would help improve pizza sales in the months ahead.

Selling pizzas was still tough across the Tasman. The company's Pizza Hut chain in Victoria was still trading below last year's levels, with sales down to $6.6 million - 11 per cent on a same-store basis.

The company said the disappointing result reinforced the decision made last month to sell the business to smaller and more flexible operators.

There had been considerable interest in the 50 Victorian stores and several agreements were being concluded.

Business at the Starbucks Coffee chain perked up a bit with sales rising to $7 million or 13.6 per cent on the year earlier, and 2.6 per cent on a same-store basis

New stores were due to be added to the present 44 outlets in the near future.

Competition is hotting up in the takeaway chicken market as Australian chain Red Rooster seeks investors to help fund its expansion in this country from four stores.

It plans to increase that number to seven by the end of the year with a fifth store due to open in Mt Wellington next month.

Restaurant Brands also faces a possible challenge from US pizza chain Papa John's, which is reported to be planning 75 stores here.

Shares in Restaurant Brands rose 1c to $1.28.