Fast-food company Yum! Brands (NYSE:YUM) missed analysts' expectations in Q1 CY2024, with revenue down 2.9% year on year to $1.60 billion. It made a non-GAAP profit of $1.15 per share, improving from its profit of $1.06 per share in the same quarter last year.

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Spun off as an independent company from PepsiCo, Yum! Brands (NYSE:YUM) is a multinational corporation that owns KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill.

Traditional Fast Food

Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.

Sales Growth

Yum! Brands is one of the most widely recognized restaurant chains in the world and benefits from brand equity, giving it customer loyalty and more influence over purchasing decisions.

As you can see below, the company's annualized revenue growth rate of 4.8% over the last five years was weak , but to its credit, it opened new restaurants and grew sales at existing, established dining locations.

This quarter, Yum! Brands missed Wall Street's estimates and reported a rather uninspiring 2.9% year-on-year revenue decline, generating $1.60 billion in revenue. Looking ahead, Wall Street expects sales to grow 13.2% over the next 12 months, an acceleration from this quarter.

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Same-Store Sales

Same-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.

Yum! Brands's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 4.1% year on year. With positive same-store sales growth amid an increasing number of restaurants, Yum! Brands is reaching more diners and growing sales.

In the latest quarter, Yum! Brands's same-store sales fell 3% year on year. This decline was a reversal from the 8% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.

Key Takeaways from Yum! Brands's Q1 Results

Yum! Brands's revenue unfortunately missed analysts' expectations on lower-than-expected same store sales. Management cited a "difficult operating environment". Additionally, EPS missed Wall Street's estimates as well. Overall, this was a mediocre quarter for Yum! Brands. The company is down 5.8% on the results and currently trades at $133 per share.

So should you invest in Yum! Brands right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.