Restaurant brands fourth quarter sales up 2.8%

By NZPA

Thursday 8th March 2007

Fast food operator Restaurant Brands says fourth quarter sales across its three brands were up 2.8% on the equivalent period last year to $69.7 million.

Total New Zealand same store sales for the 12 weeks to February 26 were up 3.1%, with chief executive Vicki Salmon saying both KFC and Starbucks ended a record sales year with both showing strong same store sales growth.

"The transformation of KFC is clearly gaining momentum as we combine store revamps with some innovative new products and a successful promotional calendar," she said today.

But Pizza Hut New Zealand had not yet achieved the required improvement in sales and continued to focus on operational improvements and new marketing initiatives.

For the full year, total New Zealand sales increased 1.7% to $293.6 million and same store sales increased 0.8%.

Fourth quarter and full year sales results do not include Pizza Hut Victoria which was classified as a discontinued operation at the half year.

Restaurant Brands said it expected full year net profit before non-trading items to be in the range of $6.2 million to $6.5 million.

It intended releasing its audited results for its financial year ended February 26 on April 12.

The company also said that none of the parties it had been talking to after they expressed an interest in becoming involved in the business had made a firm proposal.

KFC's fourth quarter sales increased 6.5% to $44.6m, and same store sales increased 7.8%.

It was the seventh consecutive quarter of same store sales growth, the company said. "During the quarter we continued our plans for the KFC brand transformation including the introduction of a new logo," Salmon said.

"We are particularly pleased with the way in which the transformation strategy is leading to an improvement in sales across the network, not just those with new look facilities, and remain confident of the long term growth that can be delivered from this business."

KFC ended the financial year with the highest total sales ever at $182.7m, an increase of 6.3% over the prior year. Same store sales increased 7.1% for the full year, the highest annual same store sales growth.

Store numbers remained constant at 87 during the quarter, compared with 88 at the end of last year.

Total fourth quarter sales for Pizza Hut New Zealand were down 8.6% over the prior period to $17.2m, with same store sales down 7.5%.

Increased marketing activity during a traditionally slow period for pizza sales had led to increased transactions, but work was still needed to get business back to satisfactory levels, Salmon said.

It had been decided that the remaining 15 Red Roof Restaurants would be replaced with delivery and takeaway outlets, which better met the needs of customers.

Pizza Hut ended the year with 103 stores compared with 107 at the end of the prior year.

For the full year, total Pizza Hut New Zealand sales were down 10.5% to $79.7m, with same store sales declining 11.8%.

Starbucks Coffee had its 13th quarter of sales growth, increasing 10.6% on the prior year to $7.9m. Same store sales were up 3.9%.

Christmas merchandise sales had contributed to the result, Salmon said.

Year to date sales were up 12.2% to $31.3m, an increase of 12.2%, and same store sales grew 3.2%.

At the end of the year 23 of the original 50 Pizza Hut Victoria outlets remained to be sold, Restaurant Brands said.

Of those 23 stores, 19 were subject to sale and purchase agreements. Those stores were expected to be transferred to the new owners in the next three months.

During the quarter, total sales for this business were $A3m ($NZ3.4m), down 46% on the prior year as stores were exited.

Restaurant Brands shares closed at $1.13 yesterday, having ranged between 91c and $1.34 in the past year.

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