Fast-food – Businesses from a broad range of industries have already started to submit their quarterly results following the fourth quarter.
Overall, it’s a mixed bag, with fast-food restaurants performing well.
The good news is that casual dining and fast-casual restaurants have had problems attracting new patrons.
The news
Very few publicly listed restaurant companies have released their most recent quarterly results, despite the fact that the fourth quarter has concluded.
A new trend was emphasized by the few who reported it.
During the Christmas season, consumers who were dealing with inflation cut back on eating out and shopping.
Instead, fast-food outlets offer restricted menus and discounts to entice customers from a range of socioeconomic levels.
Economy resilience
The market has been affected by economic upheavals and downturns throughout the years, but the fast-food sector has consistently been among the most resilient.
For instance, McDonald’s, one of the biggest fast food chains in the industry, recorded same-store sales growth of 10.3%.
Low-income customers, who came more frequently than they had in the previous two quarters, were primarily responsible for the increase.
Executives claim that the Adult Happy Meal marketing was a resounding success.
When incorporated into McRib’s yearly return, they greatly enhanced sales.
Contrary to expectations from the industry, the fast-food giant’s US traffic increased for a second consecutive quarter.
Other chains
A different fast-food business, Yum Brands, said there was significant US demand.
Taco Bell’s domestic same-store sales increased by 11% throughout this time.
The increase in morning orders, the return of Taco Bell value meals, and the enduring appeal of Mexican pizza are the causes of the remarkable sales.
Pizza Hut’s same-store sales increased by 4% in the US.
KFC had a paltry 1% gain and difficult year-over-year comparisons.
In the next few weeks, more fast-food restaurants aspire to elevate their position.
Burger King’s parent company, Restaurant Brands International, is anticipated to release its fourth-quarter financial results on Tuesday.
Pizza Hut will report its financial results on February 23.
A disappointing quarter
Despite the fact that many fast food businesses claimed growth, Chipotle Mexican Grill’s sales were a touch underwhelming.
For the first time in more than ten years, the company’s quarterly profits and sales on Tuesday fell short of Wall Street expectations.
Customers were told by Chipotle’s CEO, Brian Niccol, that there had not been a “meaningful resistance” to the fast-food restaurant’s price increases.
Instead, management at Chipotle provided a list of explanations for its disappointing performance, including:
- Bad economic weather
- The underperforming debut of the Garlic Guajillo Steak
- Challenging comparisons to 2021’s brisket launch
- Seasonality
Chipotle’s chief financial officer, Jack Hartung, blamed the dip in December on the month’s subpar retail sales.
“As we got around the holidays, we didn’t see that pop, that momentum, that we normally see,” said Hartung.
“Frankly, we started the quarter soft, and we ended the quarter soft.”
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According to Chipotle, traffic started to go up in January.
The Omicron outbreaks from a year ago, which forced Chipotle and other businesses to either close their doors early or for a small period of time, are easy to compare to, though.
The moderate January weather raised demand across the board for the sector, claims a research note issued by Bank of America analyst Sara Senatore and published on Wednesday.
The fourth quarter financial records for the fast-casual food industry are still unavailable to the general public.
The date of February 16 has already been decided by Shake Shack.
However, the massive fast food restaurant business acknowledged at the beginning of January that its same-store sales growth fell short of Wall Street forecasts.
Portillo’s will report its profits on March 2, while Sweetgreen will do so on February 23.
The casual dining scene
Although the fast-food industry has mostly prospered, fast-casual restaurants have had more difficulties than casual dining establishments.
Casual dining establishments struggle to bring in new clients since Chipotle, Sweetgreen, and Shake Shack have established themselves as preferable alternatives.
Red Lobster and Applebee’s used a variety of strategies, including significant discounts and increased promotional expenditure.
The problem already existed for many restaurant firms, including Brinker International, and the rise in inflation did little more than make it worse.
Chili’s Grill and Bar is now being turned around by the firm.
Brinker said at the beginning of the month that for the three months that concluded on December 28, Chili’s traffic fell 7.6%.
Investors were told on the conference call by Brinker’s CEO and former US President Kevin Hochman that a decline was anticipated as the company attempted to lessen its reliance on unfavorable agreements.
Chili’s increased their prices to discourage customers from using coupons.
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