VAUGHAN Ontario Priszm Income Fund, franchisee of 484 Taco Bell, KFC, Pizza Hut and Long John Silver’s units across Canada, said it will divest 145 restaurants over the next two years, as it posted a decline in third-quarter earnings and sales.
Earnings for the third quarter ended Sept. 9 were $4.6 million, compared with $5.1 million a year earlier. Sales decreased 4 percent to $122.4 million, compared with $127.4 million for the year-ago quarter. Same-store sales fell 4.7 percent.
Priszm, the largest quick-service restaurant operator in Canada, will sell 120 outlets, primarily to existing operators, and close 25 KFC restaurants, according to a company statement. It expects to receive between $20 million and $30 million from the sale.
The company, which is led by John Bitove Jr., blamed the poor results on rising chicken prices, ill-conceived promotions, higher labor costs and other margin pressures. Before the end of the year, Priszm plans to launch in its KFC stores toasted chicken wraps and chicken bowls, which now are being tested in stores in Manitoba.
Priszm’s woes compare to those that franchisor Yum! Brands Inc. is experiencing in the United States, where its third-quarter blended same-store sales grew just 1 percent.
