Taco Bell, KFC parent company blames poor sales on Middle East conflict

The parent company of multiple fast-food brands including Taco Bell, KFC and Pizza Hut says its sales took a hit in the fourth quarter amid ongoing tensions in the Middle East.

Yum Brands CEO David Gibbs said during a call with investors Wednesday that “top-line sales were impacted by the conflict in the Middle East region, with varying degrees of impact across markets in the Middle East, Malaysia and Indonesia.”

“This represented a low-single-digit headwind to Yum’s overall sales growth,” Gibbs said, adding the company expects the impact on sales to decrease over the course of 2024.

Yum Brands is at least the third restaurant giant to claim weaker sales as a consequence of Israel’s war with Palestinian militant group Hamas, following earlier reports from Starbucks and McDonald’s.

KFC’s Middle East unit reported a decline of 5 percent for the quarter, while Pizza Hut’s regional unit decreased by 3 percent, according to the earnings report.

Overall, KFC saw 2 percent sales growth in the fourth quarter, per the earnings report, which is more than 2 points lower than StreetAcount’s estimates of 4.7 percent, according to CNBC.

Pizza Hut, meanwhile, reported a 2 percent decline in same-store sales. Its U.S. same-store sales decreased by 4 percent, while international sales overall were flat.

The pizza chain came under scrutiny last month after photos circulated by the Pizza Hut Israel Instagram account appeared to show the company giving away free pizzas to Israel Defense Forces soldiers in the country, KTLA reported.

The since-deleted post prompted calls to boycott the company in protest of Israel’s bombardment of Gaza, which has killed more than 27,700 people since early October, according to figures from the Hamas-run Gaza Health Ministry.

Taco Bell, which contributes a significant portion to Yum’s overall profits, reported a 3 percent sales growth, a significant drop from the 11 percent it reported for the same quarter a year ago, CNN Business reported, and also lower than analyst estimates.

The weakened sales report comes just days after McDonald’s reported lower-than-expected sales, which it called a reflection of “the impact of the war” between Israel and Hamas.

The fast-food company faced similar backlash last year after McDonald’s Israel gave away thousands of free meals to Israeli forces and citizens following Hamas’s surprise assault on southern Israel that killed about 1,200 people.

Starbucks is also facing boycotts over accusations of support for Israel. The company last week lowered its sales forecast in the wake of weakened spending in China and other markets, The Associated Press reported.