Restaurant Brands' sales fall 6.5pc

The KFC at the Gate Pa Shopping centre in the Bay of Plenty. Sales at Restaurant Brands' KFC stores fell 0.9pc in the past quarter, reflecting the Chch earthquake and store refurbishments. Photo / Mark McKeown

Restaurant Brands, the fast food franchise operator, reported a 6.5 per cent drop in second-quarter sales on the weaker retail environment, the impact of the Christchurch earthquakes and continued store closures. The shares fell 1.3 per cent.

Total sales for the 16 weeks ended September 12 fell 6.5 per cent to $93.9 million, the Auckland-based retailer said in a statement today. Same-store sales were down 4.5 per cent. The company said it expects a pick-up in second-half earnings and will provide full-year guidance with its interim results on October 19.

"Restaurant Brands has not been exempt from the effects of continued negative consumer sentiment and a weak retail environment that has been evident since the increase in the GST rate last October," said chief executive Russell Creedy.

In the second half the company expects "higher levels of consumer confidence and better retail sales with the stimulation of the Rugby World Cup and improving general economic conditions," he said.

The second quarter sales were hurt by the February 22 earthquake in Christchurch, with only one of its five stores in the city having reopened since the disaster, denting sales by about $1.3 million. The effect on the bottom line would be offset by material damage and business interruption insurance.

Sales at the company's flagship KFC stores fell 0.9 per cent to $72.1 million, reflecting Christchurch store closures, as well as refurbishments. Same-store sales fell by 3.5 per cent.

The company's Pizza Hut stores continued to struggle to find traction in the second quarter, with total sales falling 27 per cent to $14 million, reflecting the sale of 11 stores to independent franchisees and three closures. Same-store sales fell 13.5 per cent.

Second quarter sales at the company's Starbucks outlets fell 8.3 per cent to $7.8 million, with revenue impacted by four store closures. Same-store sales rose 6.2 per cent.

Restaurant Brands' shares, which were one of the best performers on the NZX last year, recently traded at $2.21, and have declined 16 per cent in value since January 1.