Yum sees smaller KFC, Pizza Hut meal orders as dining out resumes

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A delivery staff member wearing a protective mask enters a KFC fast food outlet after a delivery, amid concerns about the spread of the coronavirus disease (COVID-19), in Colombo, Sri Lanka, July 9, 2020. REUTERS/Dinuka Liyanawatt

April 28 (Reuters) - KFC and Pizza Hut owner Yum Brands Inc (YUM.N) said it expects people to spend less per order as they start dining out again, taking the shine off an overall increase in demand during the first quarter due to the reopening of major economies.

Although sales at Yum's restaurants fell in 2020 due to COVID-19 closures and capacity restrictions, average expenditure per order jumped as consumers spent more on larger family and combo meals while ordering in.

In general, Yum is seeing a dip in order values as markets reopen, Chief Financial Officer Chris Turner said on a call with analysts on Wednesday.

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"We expect ticket (order value) to come down from where it's at (now), but I don't know if it will return to its pre-COVID levels," Turner added.

The company, however, said online orders remained strong and people were returning to restaurants in developed markets, such as the United States and United Kingdom, where vaccines are rolling out at a relatively faster pace.

Fresh government stimulus checks have boosted consumer spending at U.S. restaurants, many of which are struggling to hire new workers fast enough to keep up with the jump in sales. read more

Still, Chief Executive Officer David Gibbs warned of some pain in emerging markets where rising infections have led to fresh lockdowns.

"The markets that are struggling are the ones where we have government action that is limiting our ability to trade. In India, we have to close our stores at 3 o'clock in the afternoon. That's obviously going to have an impact on our business," Gibbs said.

Comparable sales of the company, which also owns Taco Bell, rose 9% in the first quarter, beating estimates of an 8.6% increase, according to data from Refinitiv IBES.

Total revenue rose 18% to $1.49 billion above estimates of $1.45 billion. Net income of $1.07 per share also beat Wall Street expectations.

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Reporting by Uday Sampath in Bengaluru; Editing by Amy Caren Daniel

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