KANSAS CITY (B)--Pizza Hut may sell more Big New Yorkers while KFC sells fewer buckets of chicken this year than Tricon Global Restaurants, the owner of both chains, previously thought. But as the company adjusted sales projections for two of its three chains April 27, it didn't change its outlook for overall sales and profits.
During a conference call with analysts and investors, Tricon's chief financial officer, David Deno, said same-store sales at Pizza Hut would increase at a low double-digit percentage rate in 2000, with same-store sales at KFC remaining flat to slightly higher for the year.
Three months ago, when the company reported its fourth-quarter results, company officials said Pizza Hut's sales would remain flat in 2000 but KFC's same-store sales would rise 2% to 3%.
Pizza Hut's same-store sales rose 9% for all of 1999, but company officials previously predicted the chain would merely match last year's revenues in 2000.
However, although same-store sales at Pizza Hut declined 2% in the first quarter, company officials said
the performance remaine d strong off a same-store sales increase of 14% during last year's first quarter.
In addition, Pizza Hut will reintroduce The Edge pizza variety May 1. Combined with the first-quarter figures and new varieties it will introduce later this year, Deno said the chain would surpass last year's sales.
KFC, though, continues struggling to make its new chicken sandwiches an item that attracts more customers.
Consequently, the company has scaled back same-store sales projections for the nation's biggest fast-food chicken chain -- even though KFC's performance abroad drove strong international profit growth in the recently completed quarter.
"The sales mix has changed somewhat, but we expect to be able to deliver on our previous commitment," Deno said.
In the current second quarter, Deno said same-store sales at KFC and Taco Bell, the company's other chain, would decline slightly while Pizza Hut's sales stay flat or increase slightly.
"We expect a very similar picture as we saw in the first quarter," Deno said.
He said the Wild Chalupa promotion at Taco Bell, touting its newest product, did not succeed, leaving the chain's performance sluggish.
But Deno said same-store sales at all three of Tricon's concepts should turn positive by the end of the quarter into the second half of the year.
Meanwhile, Deno said the company expects to meet its 2000 savings target of $50 million on selling, general and administrative expenses by the end of the second quarter. SG&A expenses dropped $32 million to $181 million in the first quarter.
Regarding other topics, Novak said the company would go ahead with plans to introduce Pizza Hut personal pan pizzas at Taco Bells and KFCs later this year, despite concerns by franchisees of the latter two.
Multi-branding, as the company calls it, has not caused cannibalization of KFC and Taco Bell products yet, he said.
April 27 call and revised same-store sales projections occurred after Tricon exceeded Wall Street expectations Wednesday with first-quarter operating profits of $96 million, or 64 cents per share, a 20% increase from last year.