Yum China's Pizza Hut Fights Its ‘Backup Boyfriend’ Image

Yum China Holdings Inc.’s Pizza Hut is still stuck in the shadow of its more successful chain, KFC.

While KFC sales continue to gain steam -- fueled by its growing loyalty club, mobile ordering and deliveries -- the company’s latest earnings report shows Pizza Hut sales only grew modestly at the end of the year.

“While we finished 2017 with a solid sales momentum, we continue to face challenges of the revitalization of Pizza Hut,” Chief Operating Officer Joey Wat said in a statement.

Yum China, which split from the U.S. fast-food giant Yum! Brands Inc. in 2016, wants Pizza Hut to grow faster. But it’s struggling to overcome a perception problem: The company last year said customers described Pizza Hut as their “backup boyfriend” option -- “nice” but “not very desirable.”

Pizza Hut same-store sales rose 1 percent in the period. Though that was a bit above the 0.2 percent estimate from Consensus Metrix, investors were looking for clearer signs of momentum. Yum China shares fell as much as 4.7 percent to $42.20 in extended trading on Wednesday.

“Pizza Hut is not firing on all cylinders by any means yet,” Edward Jones analyst Brian Yarbrough, said.

KFC comparable sales, meanwhile, jumped 7 percent -- higher than the projection for 4.7 percent growth. Membership in its loyalty club surged to 110 million members, up from 97 million the previous quarter.

Yum China also is expanding Taco Bell in China, aiming to draw diners with cocktails and warm nacho-cheese sauce.

Yum Brands will report fourth-quarter results before U.S. markets open Thursday.