Menus & Promotions

May 23, 2019 | Report Announcements

Report Highlights

RR’s Menu & Promotions analysis provides data for 56 chains (33 QSR and 23 FSR) including: (1) a 5-year history of total menu items (2014 – 2018); (2) promotional mix by quarter; (3) new product intros; (4) average check; (5) sales composition; (6) menu category mix; and (7) monthly new product calendar.

Conclusions

After years of menu optimization in order to simplify operations, speed-up service and improve food quality, average menu size was relatively unchanged from last year (-1.4% for QSR and +0.2% for FSR) which suggests the industry has finally found a point of equilibrium as the brands balance providing ample menu variety with keeping menu complexity in check. Innovation is currently focused on customization options, new digital ordering platforms and delivery access.
New product introductions declined (-4.6% for QSR and -4.1% for FSR) due to a continued focus on value and efforts to reduce operational complexity. Notably, increases in the QSR value promotional mix was negatively correlated (-55%) to quarterly comps over the last couple of years. This means that a QSR value focus has been detrimental to sales, suggesting deal fatigue. Not surprisingly, increases in the FSR value promotional mix helped drive comp growth (positive correlation of almost +21%). Rather, QSR sales have benefit from premium promotions and new product news. This is the inverse for FSR where value is all that matters after years of steady price increases.
Average check growth accelerated for QSR (+3.2%) but moderated for FSR (+1.9%). The Food at Home CPI turned slightly positive (+0.4%) for the first time in 2 years, narrowing the price gap between restaurants and grocery stores.
Although delivery still represents a very small sales mix, it is growing rapidly as a result of 3rd party aggregators.

Menus & Promotions Report Outline

← Wendy's Domino's →

Email Sign-up

What is the Federal Government’s Job?

A couple of weeks ago we conducted a thought experiment in which the government became a nonprofit, and this week we propose another thought experiment in which the government becomes a public corporation. We suggest that this could provide very useful input into the debt ceiling debate.

The Importance of the Balance Sheet in Financial Analysis

While most investors are focused on sales growth & margins, they would be well served to further consider the strength of a company’s balance sheet. We look at BlackRock’s financial condition as an illustrative point.

The Importance of Free Cash Flow in Financial Analysis

Cash represents the lifeblood of all business enterprises which is why it is important to analyze free cash flow which we define as operating cash flow minus capex, dividends, and stock buybacks. We illustrate DoorDash as an example of why cash flow analysis is so important.

Lessons From Tucker Carlson

There are many theories about why Fox booted Tucker Carlson, but it may be a very simple reason which can instruct everyone involved in the consumer retail segment.

It is Imperative that Climate Change Regs Incorporate Economic Reality

This week we spotlight efforts by international agencies to lower the earth’s temperature by imposing onerous regulations on energy producers. We suggest it will be better to: begin a process of implementing continuous improvements designed to support both economic & climate progress; and use international organizations to share tech & best practices as opposed to providing them with regulatory powers best left to individual nation-states.

Part 3 – It’s Nice for the US to Save the Climate, But What About the Rest of the World?

In our last 2 posts, we outlined the probability that the UN’s push to lower the world’s temperature by -2 degrees Celsius could drive significant U.S. energy price hikes & shortages. How is this going to help as Asia ramps up the use of coal? Can humans lower the earth’s temperature anyhow?

Part 2: Who is Left to Make Investments in Fossil Fuels & Clean Energy?

There is not a lot of incentive for profit-seeking companies to invest in demonized fossil fuels or in clean energy projects lacking ROI. This points to substantially higher energy prices and supply shortages that will have a profound economic impact.