New | Yum blames South China Sea for battering results in Asia

Yum! Brands Inc., the fast-food giant that owns KFC, Pizza Hut and Taco Bell, had an unusual reason for its results falling short of expectations last quarter: the dispute over the South China Sea.

After an international arbitration court invalidated Chinese claims to a wide swath of the region in July, consumers in the country lashed out against Western companies. That took a toll on Yum’s sales, Chief Executive Officer Greg Creed said on Wednesday.

Analysts had projected a same-store sales gain of 4.1 per cent in China during the third quarter, according to Consensus Metrix. Instead, they fell 1 per cent, marring the final full quarter that the Chinese business will be part of the company. Yum plans to complete a spinoff of the operations on October 31.

“Sales were off to a good start in the first six weeks of the quarter,” Creed said in a statement announcing the results.

However, the court ruling “triggered a series of regional protests and negative sentiment against a few international companies with well-known Western brands. If not for this event, we believe the China division would have delivered its fifth consecutive quarter of positive same-store sales growth.”