QSR

McDonald’s Corp 3Q23: Revenue +14% Y/Y, U.S. Comp +8.1%, Op Inc. +16%

McDonald’s Corp 3Q23: Revenue +14% Y/Y, U.S. Comp +8.1%, Op Inc. +16%

While McDonald’s top-line growth continues to moderate because of ongoing consumer spending pressure, the brand’s leadership in value & affordability is driving sales outperformance. In any case, high inflation, elevated fuel costs & interest rates, and housing affordability pressures continue to prompt consumers to discriminate about what & where they spend.

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Chipotle 3Q23: Sales +11% Y/Y, Comps +5% (Including +4% Traffic), EBITDA +16%

Chipotle 3Q23: Sales +11% Y/Y, Comps +5% (Including +4% Traffic), EBITDA +16%

Chipotle reported that it continues to do well across all income levels, with sales to lower-income consumers performing at about the same level as medium & high-income guests. This success is attributed to Chipotle’s attractive value equation (the chain had not raised prices in 1+ years until a recent price hike). Urban stores are outperforming by +1% although the gap is narrowing.

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Wendy’s 2Q23: Comps Up +4.9%

Wendy’s 2Q23: Comps Up +4.9%

Net disposable income is starting to improve & Wendy’s is keeping customers that traded down from mid-scale casual last year. Also, management reported higher income cohorts are starting to shift into QSR & that the lower income cohort will benefit as inflation continues to moderate.

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Burger King 2Q23: Comps Up +8.3%

Burger King 2Q23: Comps Up +8.3%

BK’s going forward sales should benefit from a ramp-up in its plans to invest $400MM for a brand upgrade, including $150MM “Fuel to Flame” spend on advertising & digital investments and another $250MM “Royal Reset” spend on high-quality remodels & relocations, restaurant tech, kitchen equipment, and building enhancements.

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