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Restaurant Brands lifts KFC sales on spruced-up stores

Tuesday 16th September 2008

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Restaurant Brands NZ, which holds the local franchise for KFC, Pizza Hut and Starbucks, lifted sales at its chicken outlets by 4.4% after sprucing up the stores and widening the menu.

KFC, which accounts for two thirds of the company's revenue, boosted sales by NZ$2.7 million to NZ$63.4 million, Restaurant Brands said in a statement. The increase helped make up for weaker sales at Starbucks and Pizza Hut amid rivalry for pizza sales and fewer stores.

Total sales at the company fell 1.3% to NZ$92.4 million, while same-store sales rose 1.2%. Restaurant Brands has been grappling with intense competition in the pizza market, which has eroded profit margins and undermined the returns from its restaurants. A slump in consumer sentiment has hurt retailers ranging from department stores to clothing outlets.

The boost in KFC sales "was a particularly satisfactory result in the light of tighter economic conditions, rising consumer prices and reported general downturn in retail sales," chief executive Russel Creedy said in a statement.

Sales at Pizza Hut fell about 16% to NZ$19.4 million, or a decline of 11% on a same-store basis. The company is embarking on a new marketing campaign that "recognizes the importance of a strong value message to customers."

Starbucks sales fell 2.2% to NZ$9.6 million.

Shares of Restaurant Brands were unchanged at 65 cents, the lowest in at least a decade. The stock is down 28% this year.

By Jonathan Underhill

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