Earnings Show Fast-Food Giants Embroiled in a Game of Chicken
Last week delivered a bevvy of earnings reports from fast-food giants — including McDonald's, Wendy's, Yum! Brands, and Restaurant Brands International — with the results showing the industry's biggest trend continues apace: Customers can't get enough chicken, especially when offered at a discount.
READ ALSO: Ford Crosses into Fast Lane With $2 Billion Affordable EV Plan and Paramount Ponies Up $7.7 Billion to Win UFC Rights
Winner, Winner, Value Chicken Dinner
First things first: Amid a prolonged period of economic uncertainty, the value menu remains invaluable. But even a price war among the world's biggest restaurant chains isn't enough to keep low-income consumers coming through drive-throughs. Instead, they continue to flee fast food in favor of value grocery stores, R.J. Hottovy, head of analytical research at Placer.ai, told The Daily Upside. In what may be a macroeconomic bellwether, Hottovy also said low-income consumers are increasingly shifting down even from value grocery chains like Aldi to cheaper convenience stores and dollar stores.
Still, value remains a big driver. So much so that in its second-quarter earnings call on Friday, Wendy's said a major driver of a sales decline (that still beat analysts' expectations) was having too many promotions, which interim CEO Ken Cook said 'sent too many different messages' to customers. 'We learned that when we have too many priorities, we have none,' Cook added, before saying that Wendy's will have one top priority through the rest of the year: chicken. (McDonald's seemed to crack the code this past quarter, citing the return of its McCrispy Chicken Strips driving sales growth.)
For more evidence of chicken fever, look no further than Yum's portfolio:
True, not even chicken could save the colonel: Same-store sales at US Kentucky Fried Chicken locations slid 5%, as the chain continues to suffer amid increased competition from the likes of Raising Cane's and Wingstop.
But Taco Bell saw US same-store sales growth of 4%, with Yum citing a new line of Crispy Chicken menu items and the reintroduction of chicken nuggets. In fact, Yum CEO David Gibbs said Taco Bell's chicken sales are up 50% in the past two years.
'Most people are reporting negative quarters. We haven't even had a negative week for Taco Bell,' Gibbs said.
Extra Guac, Please: Pricier chains are facing the same pressures — and struggling. Shares of Sweetgreen plunged more than 25% on Friday after the chain lowered its profit guidance for the second consecutive quarter. Meanwhile, Chipotle experienced its second straight quarter of same-store sales declines, with CEO Scott Boatwright saying the chain needs to figure out how to 'communicate value and showcase value.' Did you catch that, Chipotle employees? To our ears, it sounds like your CEO is practically begging you to give us a scoop of guacamole on the house.
This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.
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- USA Today
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Fast Company
an hour ago
- Fast Company
After the Paramount merger, could UFC stage a July 4th fight at the White House?
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White, though, is part of the promotional team for the Canelo Álvarez and Terence Crawford fight in September in Las Vegas that airs on Netflix. 'It's definitely not run it's course,' White said. 'There were guys out there who were interested in pay-per-view and there were guys out there that weren't. Wherever we ended up, that's what we're going to roll with.' White said UFC archival footage 'kills it' in repeat views and those classic bouts also needed a new home once the ESPN deal expires. Just when it seems there's little left for UFC to conquer, White says, there's always more. Why stop at becoming the biggest fight game in the world? Why not rewrite the pecking order in popularity and riches and go for No. 1 in all sports? 'You have the NFL, the NBA, the UFC, and soccer globally,' White said. 'We're coming. We're coming for all of them.'
