Americana scales back expansion plans as profit tumbles
Americana Restaurants International, the operator of KFC, Pizza Hut and Hardee’s across the Middle East and North Africa (MENA) region, has scaled back its expansion plans for this year amid current geopolitical challenges.
The company reported a 44.8% dip in net profit to $80 million for the first six months of the year. Revenues slumped 15.2% year-on-year from $1.24 billion to $1.05 billion.
Revenue growth was impacted by “lower like-for-like sales due to the ongoing regional geopolitical situation, despite support from new store openings,” the company said in a statement.
Americana, which operates 2,477 outlets as of June 30, will scale back from its original plan to open up to 225 new stores this year.
Expansion plans have been altered “in consideration of the evolving geopolitical environment.”
Instead, the company has now plans to add between 175 and 185 new restaurants in 2024.
“Additionally, the company will continue to focus on revenue recovery initiatives such as smart pricing, targeting, promotion and marketing, with a sharp focus on driving transactions along with increasing marketing investments,” Americana added.
The company reported $51.9 million in Q2 profit, dipping 40.1% compared to $86.6 million during the same period last year. However, it increased 85% compared to Q1 2024.
The ongoing Gaza conflict has burned a hole through the balance sheets of several Western brands amid the ongoing Gaza conflict as consumers direct their fury towards companies that have either supported or backed Israel or downplayed the Palestinian plight.
Consumer boycotts have stung McDonald’s, too.
Sales in international developmental licensed markets decreased 1.3% in the second quarter, compared to a 14% rise in the same period last year.
International developmental licensed markets include more than 75 markets or countries, including Brazil, China, Japan and the Middle East.
“The continued impact of the war in the Middle East and negative comparable sales in China more than offset positive comparable sales in Latin America and Japan,” the fast-food colossus said on Monday.
