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Business

Fast-food emerge in the 4th quarter with positive revenue

by Paul Stewart

March 27, 2023

Fast-food – Companies from a range of industries have already begun to release their quarterly results following the fourth quarter. ...

Fast-food – Companies from a range of industries have already begun to release their quarterly results following the fourth quarter. Overall, it's a mixed bag, however fast food restaurants are doing well. The good news is that casual dining and fast-casual restaurants have had problems trying to entice new patrons.

The news

Even though the fourth quarter is now over, only a small number of publicly traded restaurant companies have released their most recent quarterly results. The few who reported it emphasized a recent development. Inflation-strapped consumers cut back on Christmas shopping and eating out. Instead, fast-food establishments provide restricted menus and incentives to entice customers from a range of socioeconomic groups.

Economy resilience

The market has been affected 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 biggest fast food chains in the industry, had a 10.3% gain in same-store sales. Low-income consumers, 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. After being incorporated into McRib's yearly comeback, they dramatically raised sales. Contrary to industry predictions, the fast-food juggernaut's US traffic climbed for a second straight quarter.

Other chains

Yum Brands, a rival fast-food chain, asserted that there was a significant US market. Taco Bell's domestic same-store sales increased by 11% throughout this time. An increase in morning orders, the return of Taco Bell bargain meals, and the enduring appeal of Mexican pizza are all contributing factors to the astounding sales. Pizza Hut's same-store sales increased by 4% in the US. KFC experienced difficult year-over-year comparisons and a modest 1% rise. Over 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 financial results for the fourth quarter on Tuesday. Pizza Hut will announce its financial results on February 23.

A disappointing quarter

Sales at Chipotle Mexican Grill were a tad underwhelming despite the claims of growth made by other fast food companies. 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 notified by Chipotle's CEO, Brian Niccol, that there had not been any significant pushback to the fast-food restaurant chain's price increases. Instead, Chipotle management provided a list of several 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 December's sluggish retail sales for the company's fall. "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: Oil companies rake profits that brought scrutiny Chipotle claims that the increase in traffic began in January. The Omicron outbreaks from a year ago, which forced Chipotle and other businesses to either close their doors early or for a short 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 reports for the fast-casual restaurant sector are still unavailable to the general public. The date of February 16 has already been decided by Shake Shack. But the massive fast-food sector 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

Despite the success of the fast food business as a whole, quick casual restaurants have had more difficulties than casual dining establishments. Casual dining establishments struggle to bring in new consumers since locations like Chipotle, Sweetgreen, and Shake Shack have established themselves as superior alternatives. Red Lobster and Applebee's used a variety of strategies, such steep discounts and increased promotional spending. 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 over the three months that concluded on December 28, Chili's traffic fell 7.6%. During the conference call, Brinker's CEO and former US President Kevin Hochman told investors that a decline was anticipated as the company moved to lessen its reliance on unfavorable agreements. Chili's increased their prices to discourage customers from using coupons. Image source: Eat This, Not That

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Fast-food emerge in the 4th quarter with positive revenue

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Economy resilience

Other chains

A disappointing quarter

The casual dining scene

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