Wall Street Times

Fast-food among the most successful in 4th quarter earnings

Fast-food Businesses from a variety of industries have already started to report their quarterly results following the fourth quarter.

Overall, it’s a mixed bag, with fast-food restaurants doing well.

The good news is due to the difficulty fast-casual and casual dining companies have experienced in attracting new patrons.

The news

Very few publicly traded restaurant companies have released their latest quarterly results, despite the fact that the fourth quarter has come to an end.

A new trend was emphasized by the few people who made reports.

Over the holiday season, consumers who had to deal with inflation cut back on their out-of-home dining and shopping.

Instead, fast-food restaurants have leveraged their promotions and reduced menus to entice customers from all socioeconomic levels.

Economy resilience

The market has been influenced by economic upheavals and downturns throughout the years, but the fast-food sector has always ranked among the most resilient.

For instance, McDonald’s, one of the industry’s biggest fast food chains, posted same-store sales growth of 10.3%.

Low-income customers returned more frequently than they had in the preceding two quarters, which contributed to the increase.

Executives claim that the Adult Happy Meal marketing was a resounding success.

They greatly raised sales when combined with McRib’s yearly return.

Contrary to industry statistics, the fast-food behemoth’s US traffic increased for the second consecutive quarter.

Other chains

Another fast-food business, Yum Brands, claimed high US demand.

Taco Bell’s domestic same-store sales increased by 11% throughout this time.

The growth in morning orders, the reintroduction of Taco Bell value meals, and the acceptance of Mexican pizza are the causes of the outstanding sales.

Pizza Hut’s same-store sales increased by 4% in the US.

KFC had difficult year-over-year comparisons and a modest 1% increase.

In the upcoming weeks, more fast-food restaurants intend to upgrade their status.

Burger King’s parent company, Restaurant Brands International, is anticipated to release its fourth-quarter earnings on Tuesday.

The release of Pizza Hut’s financial results is planned for February 23.

A disappointing quarter

Even while several fast-food chains reported gains, sales at Chipotle Mexican Grill 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 reassured by Chipotle CEO Brian Niccol that there had not been any “significant reaction” to the fast-food chain’s pricing increases.

Instead, Chipotle management provided a long list of explanations for its disappointing results, 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 period’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.”

Read also: Bard: New Google AI caught in a blunder

According to Chipotle, the volume of traffic began to rise in January.

But it’s easy to compare to the Omicron outbreaks from a year ago, which forced Chipotle and other businesses to either close their doors early or for a short while.

The warm January weather enhanced demand for the whole business, according to a research note issued by Bank of America analyst Sara Senatore and published on Wednesday.

Fast-casual restaurant chains have not yet made their fourth-quarter profit reports available to the public.

The date of February 16 has already been decided by Shake Shack.

However, the fast food restaurant giant 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

Fast-casual restaurants have had more difficulties than casual dining establishments, despite the fact that the fast-food industry has mostly prospered.

Since Chipotle, Sweetgreen, and Shake Shack became well-known as superior replacements, businesses that offer casual dining have had a difficult time attracting new consumers.

Red Lobster and Applebee’s used a variety of strategies, such steep discounts and increased advertising investment.

The problem already existed for many restaurant businesses, 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 over the three months that concluded on December 28, Chili’s traffic fell 7.6%.

Brinker’s CEO and former US President Kevin Hochman told investors on the conference call that a decline was anticipated as the company works to cut back on less attractive deals.

Chili’s increased their prices to discourage customers from using coupons.

Image source: Reddit

Opinions expressed by The Wall Street Times contributors are their own.