Updated to include comments from Yum! Brands spokesman in fourth, ninth and tenth paragraphs.
And those positives were not hard to find.
Meanwhile, KFC's overall same-store sales rose 4%, beating the 2.7% consensus forecast. Interestingly, strong sales were captured in Russia and Continental Europe, two regions contending with volatile economic conditions. Russia KFC sales increased 39%, while Europe rose 14%.
As for the earnings shortfall, it could be traced to several factors.
"While the initial relaunch of the Pizza Hut brand in the U.S. did not deliver the sales lift we expected, consumers have responded positively to the new menu and we intend to leverage this more effectively going forward," said Yum! Brands CEO Greg Creed, in a statement. Same-restaurant sales at Pizza Hut were unchanged, versus Wall Street's estimates of a 0.3% increase.
Analysts likely underpinned this optimism based on the brand's healthier new menu items and sleeker packaging launched in late November. In particular, Yum! Brands added 11 new regular pizzas and five Skinny Slice pizzas to the Pizza Hut menu, featuring thinner crusts and 250 calories or less per slice. According to Blum, 90% of Pizza Hut customers plan to re-order the newer pizzas, suggesting sluggish sales were confined to older areas of the Pizza Hut menu. Rival Domino's Pizza (DPZ) - Get Report , meanwhile, has gained share with the help of a heavy does of promotions and also its new mobile ordering service that relies on a voice assistant. Pizza Hut's changes, however, offers up hope that the chain can begin to alter its image as a place for boring pizza, which in turn could drive sales.
China continued to be a sore spot for the company as it fought to regain customer trust following back-to-back food quality issues in 2013 and 2014, which dented the chain's KFC brand reputation. Same-restaurant sales in Yum! Brand's China division declined 16%, worse than the 14.4% analysts projected. "While the sales recovery in China continues to be slower than expected, we anticipate a strong second half of 2015 as the turnaround gains momentum, led by menu innovation across the year," said Creed. Blum emphasized turning around the China business has the full attention of Creed, and that further "menu innovation" and "value innovation" are on tap this year.
Yum! Brands climbed 1.1% in after-market trading to $74.46. During the regular session it closed up 0.05% to end the day at $73.65.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.