The $200 million investment that Pizza Hut, KFC and Taco Bell owner Yum! Brands (YUM) made in food delivery company GrubHub (GRUB) in early 2018 is leaving a bad taste in Yum investors' mouths.
Yum said in its latest earnings report Wednesday that it incurred a $60 million pre-tax expense tied to its GrubHub investment, a charge that lowered Yum earnings by 15 cents a share.
GrubHub's stock plunged more than 40% Tuesday following a brutally bad quarter and concerns about a costly delivery price war brewing between GrubHub, Uber Eats, Postmates and DoorDash. GrubHub blamed free delivery and promotional support for Yum and other big national restaurant partners for the weak results and outlook.
Yum has other problems, though: Pizza Hut's comeback has stalled.
The chain had put up impressive sales growth numbers recently, tied in part to its official sponsorship deal with the NFL. That deal, now in its second year, was inked after the NFL parted ways with troubled Papa John's (PZZA) last year.
But Pizza Hut's same-store sales, which measure how restaurants open at least a year are doing, were flat in the quarter. That bad news, coupled with the hit from GrubHub, was more than Yum investors could stomach. Shares plunged nearly 10% Wednesday.