Stock Market News

Fast-Food Chains Confirm Trading Down Trend as Prices Rise

2022.08.05 18:30

Fast-Food Chains Confirm Trading Down Trend as Prices Rise

By Liz Moyer

Investing.com – Fast food restaurants are confirming a trend highlighted by Walmart last month: some customers are “trading down” amid inflation that is cutting into household budgets.

McDonald’s Corporation (NYSE:MCD) said customers were opting for lower-priced value menu items and visiting less frequently, while Chipotle Mexican Grill (NYSE:CMG) said some customers were visiting less frequently and Restaurant Brands International (NYSE:QSR), which owns the Burger King and other brands, said customers are using more coupons and promotions. 

Shake Shack (NYSE:SHAK) noticed a shift in consumer patterns amid the rising inflation this spring and early summer, a reason why it missed its sales estimates and projected third quarter revenue might be lower than analysts have modeled.

Shares of McDonald’s are down 4% year-to-date, while shares of Chipotle are down 9%, and shares of Restaurant Brands are down 1.7%. 

Visits to quick-serve restaurants, which make up 82% of restaurant visits, were down 2% in the second quarter, according to data firm NPD Group, and were 3% below pre-pandemic levels.

Consumers cut back overall on restaurant visits by 2% versus last year’s second quarter, NPD said, and traffic was 6% lower than pre-pandemic levels. Meanwhile, consumer spending in restaurants rose 2%, reflecting higher costs. 

Walmart (NYSE:WMT) warned on profit after noticing that shoppers were putting off buying higher margin items such as clothing because rising prices meant they were spending more on necessities such as food.

One thing fast-food restaurants are benefitting from, according to McDonald’s: People choosing lower-cost restaurants rather than opting for higher priced full-service dining experiences.

That said, costs continue to rise for restaurant consumers. Chipotle, which is raising prices another 4% starting this month, and Shake Shack, which will raise prices 5% to 7% in the fourth quarter, are just the latest to increase prices because of rising supply costs.

Some chains see an opportunity in the challenging environment. Papa John’s International (NASDAQ:PZZA) CEO Rob Lynch told CNBC earlier this week that pizza was a great business to be in during a recessionary period. “It’s pretty much the best value you can get” for feeding a family, he said.

Shake Shack shares are down 29% year-to-date, while Papa John’s is down 31%.

Source

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 83,866.47 1.61%
ethereum
Ethereum (ETH) $ 1,925.24 2.14%
tether
Tether (USDT) $ 1.00 0.00%
xrp
XRP (XRP) $ 2.34 1.67%
bnb
BNB (BNB) $ 626.55 4.42%
solana
Solana (SOL) $ 128.06 1.56%
usd-coin
USDC (USDC) $ 1.00 0.00%
cardano
Cardano (ADA) $ 0.716942 1.67%
dogecoin
Dogecoin (DOGE) $ 0.173336 3.18%
tron
TRON (TRX) $ 0.220333 3.99%
staked-ether
Lido Staked Ether (STETH) $ 1,925.31 2.28%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 83,701.43 1.78%
pi-network
Pi Network (PI) $ 1.34 4.26%
leo-token
LEO Token (LEO) $ 9.80 0.02%
chainlink
Chainlink (LINK) $ 13.99 4.98%
the-open-network
Toncoin (TON) $ 3.46 0.96%
stellar
Stellar (XLM) $ 0.272527 3.71%
usds
USDS (USDS) $ 1.00 0.02%
wrapped-steth
Wrapped stETH (WSTETH) $ 2,309.22 2.54%
hedera-hashgraph
Hedera (HBAR) $ 0.190751 3.30%
avalanche-2
Avalanche (AVAX) $ 18.75 2.43%
shiba-inu
Shiba Inu (SHIB) $ 0.000013 1.57%
sui
Sui (SUI) $ 2.36 6.06%
litecoin
Litecoin (LTC) $ 92.29 2.22%
mantra-dao
MANTRA (OM) $ 6.98 3.44%
bitcoin-cash
Bitcoin Cash (BCH) $ 336.66 0.70%
polkadot
Polkadot (DOT) $ 4.37 1.93%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.01%
bitget-token
Bitget Token (BGB) $ 4.45 1.92%
weth
WETH (WETH) $ 1,925.70 2.26%
binance-bridged-usdt-bnb-smart-chain
Binance Bridged USDT (BNB Smart Chain) (BSC-USD) $ 1.00 0.20%
hyperliquid
Hyperliquid (HYPE) $ 13.27 2.25%
whitebit
WhiteBIT Coin (WBT) $ 28.48 0.48%
wrapped-eeth
Wrapped eETH (WEETH) $ 2,047.14 2.41%
monero
Monero (XMR) $ 211.73 1.31%
uniswap
Uniswap (UNI) $ 6.27 2.54%
susds
sUSDS (SUSDS) $ 1.04 0.07%
aptos
Aptos (APT) $ 5.35 3.87%
dai
Dai (DAI) $ 0.999577 0.05%
near
NEAR Protocol (NEAR) $ 2.63 4.83%
pepe
Pepe (PEPE) $ 0.000007 11.81%
okb
OKB (OKB) $ 50.78 5.65%
internet-computer
Internet Computer (ICP) $ 5.91 6.25%
mantle
Mantle (MNT) $ 0.814745 0.13%
ondo-finance
Ondo (ONDO) $ 0.859044 5.57%
gatechain-token
Gate (GT) $ 22.03 3.67%
ethereum-classic
Ethereum Classic (ETC) $ 17.86 2.30%
tokenize-xchange
Tokenize Xchange (TKX) $ 33.68 12.50%
aave
Aave (AAVE) $ 174.36 5.73%
coinbase-wrapped-btc
Coinbase Wrapped BTC (CBBTC) $ 83,871.47 1.73%