Fast-food – Following the fourth quarter, companies from a variety of industries have already started to deliver their quarterly results.
It’s a mixed bag overall, with quick food establishments doing well.
The good news is that fast-casual and casual dining establishments have had trouble drawing in new customers.
The news
Despite the fact that the fourth quarter has ended, very few publicly traded restaurant firms have reported their most recent quarterly results.
The handful who reported it stressed a new trend.
Consumers who were struggling with inflation reduced their holiday buying and eating out.
Instead, to draw consumers from a multitude of socioeconomic levels, fast-food restaurants provide limited menus and discounts.
Economy resilience
Economic upheavals and downturns have had an impact on the market throughout the years, but the fast-food industry has consistently been among the most resilient.
For instance, one of the largest fast food businesses in the sector, McDonald’s, had same-store sales increase by 10.3%.
The majority of the rise was attributable to low-income clients, who visited more frequently than they had in the previous two quarters.
According to executives, the promotion for Adult Happy Meals was a spectacular success.
They significantly increased sales when they were included in McRib’s annual return.
The fast-food giant’s US traffic increased for a second consecutive quarter, defying industry expectations.
Other chains
Yum Brands, a competing fast-food company, claimed that there was a large US demand.
Domestic same-store sales at Taco Bell rose by 11% throughout this time.
The amazing sales are the result of a rise in morning orders, the reintroduction of Taco Bell value meals, and the continued popularity of Mexican pizza.
In the US, Pizza Hut’s same-store sales climbed by 4%.
KFC only had a meager 1% increase and had challenging year-over-year comps.
More fast-food outlets want to improve their standing over the next few weeks.
On Tuesday, Restaurant Brands International, the parent company of Burger King, is expected to announce its financial results for the fourth quarter.
On February 23, Pizza Hut will release its financial results.
A disappointing quarter
Despite the claims of growth made by many fast food chains, Chipotle Mexican Grill’s sales were a little lacking.
The company’s quarterly profits and sales on Tuesday fell short of Wall Street projections for the first time in more than ten years.
CEO of Chipotle, Brian Niccol, informed customers that there had not been any “meaningful resistance” to the fast-food chain’s price increases.
Instead, Chipotle management listed a number of reasons for its underwhelming performance, including:
- Bad economic weather
- The underperforming debut of the Garlic Guajillo Steak
- Challenging comparisons to 2021’s brisket launch
- Seasonality
Jack Hartung, the chief financial officer at Chipotle, attributed the decline in December to the month’s weak 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.
But it’s simple to draw comparisons to the Omicron outbreaks from a year ago, which compelled Chipotle and other companies to either close their doors early or for a brief amount of time.
According to a research note written by Bank of America analyst Sara Senatore and released on Wednesday, the mild January weather increased demand across the board for the industry.
The general public still does not have access to the fast-casual food industry’s fourth quarter financial reports.
Shake Shack has already selected February 16 as the date.
But the enormous fast food industry admitted at the start of January that its same-store sales growth was below Wall Street expectations.
Sweetgreen will declare its earnings on February 23, while Portillo’s will do so on March 2.
The casual dining scene
Fast-casual restaurants have faced greater challenges than casual dining locations, despite the fast-food industry’s overall success.
Since places like Chipotle, Sweetgreen, and Shake Shack have established themselves as superior substitutes, casual eating enterprises struggle to draw in new customers.
Several tactics were employed by Red Lobster and Applebee’s, such as large discounts and increased promotional spending.
For many restaurant businesses, like Brinker International, the issue already existed, and the increase in inflation did little more than exacerbate it.
The company is presently working to turn around Chili’s Grill and Bar.
Brinker said at the beginning of the month that Chili’s traffic decreased 7.6% during the course of the three months that ended on December 28.
Brinker’s CEO and former US President Kevin Hochman informed investors during the conference call that a decrease was anticipated as the business worked to reduce its reliance on unfavorable agreements.
In order to deter people from utilizing coupons, Chili’s raised its prices.
Image source: Healthline
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