Fast food retailing group Restaurant Brands' half-year profit has taken a hit as it faced significant cost increases.
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Key numbers for the six months ended June compared to a year ago:
- Net profit $15.3m vs $34.5m
- Revenue $584.9m vs $540.6m
- Operating profit $40.3m vs $61.5m
Net profit was down $19.2 million compared to the first half of 2021, but the previous result included $11.4m in loan forgiveness from the United States federal Paycheck Protection Program (PPP) in Hawaii.
After adjusting for the PPP loan, the underlying net profit was $23.1m, down $7.8m, reflecting the effect of inflation as well as trading disruptions due to Covid-19.
The company, which runs the KFC, Pizza Hut, Carl's Jr and Taco Bell brands in New Zealand, said it was mitigating the impact of inflationary pressures by cutting costs and increasing prices.
"However, the extent of cost inflation has meant that the opportunity to pass input costs on in the short term has been limited, with consequent short term adverse profit impacts," it said.
The company also has operations in Australia, California, Hawaii, Guam and Saipan.
Its New Zealand store sales were up 5.2 percent to $251.8m. Local KFC sales remained strong and Taco Bell sales increased by $6.9m from the first half of 2021.
But operating profit in the New Zealand division was down 21 percent to $22.7m.
"Inflation has had a significant impact on ingredient and input costs and continues to do so. In addition, labour shortages relating to the Covid-19 pandemic have significantly impacted the hospitality industry in New Zealand," it said.
The shortages affected the company's ability to operate at full trading hours.
"The situation was particularly challenging during the first quarter of 2022 and, despite improvement during the second quarter, staff shortages remain an ongoing issue with high numbers of unfilled vacancies," the company said.
Restaurant Brands operated 367 stores, up 17 from the first half of 2021, with 138 stores in New Zealand, 81 in Australia, 74 in Hawaii and 74 in California.
The company is forecasting full year profit after tax to be in the range of $32m and $37m.