Fast food restaurants seeing people buy less

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People seem to be buying less food from quick-service restaurants (QSR).

That appears to be the case after companies such as Yum! Brands, Starbucks and McDonald’s offered their latest quarterly updates on their businesses.

In the first quarter, the corporate parent of KFC, Taco Bell and Pizza Hut said its overall same-store sales narrowed by 3%, which was “expected,” said Yum! Brands CEO David Gibbs in the company’s press release Wednesday.

CFO Chris Turner told analysts and investors who tuned into the earnings call that Yum! Brands had expected the first quarter to “be our most challenged” in terms of same-store sales “due to prior year lapse, a return to a more normal inflationary environment and discrete consumer demand pressures, including markets impacted by the Middle East conflict.”

Of the three major brands owned by Yum! Brands, Pizza Hut and KFC both experienced decreases in same-store sales in the first quarter, at 7% for the pizza chain and 2% for the fried chicken chain. But the same metric at Taco Bell went up 1%, according to the company.

“As far as the international consumer goes, it’s probably more of an emphasis on value than there has been in past quarters,” Gibbs said about KFC. “We are seeing the same thing in the U.S.”

In the earnings release, he also said Yum! Brands was “encouraged by strong 2-year same-store sales growth and positive momentum exiting the quarter” for its chains.

There was a decrease of 4% in Starbucks’ global comparable store sales for its second quarter. That, the company said Tuesday, was “driven by a 6% decline in comparable transactions, partially offset by a 2% increase in average ticket.”

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“Headwinds discussed last quarter have continued in a number of key markets; we continue to feel the impact of a more cautious consumer, particularly with our more occasional customer, and a deteriorating economic outlook has weighed on customer traffic and impact felt broadly across the industry,” CEO Laxman Narasimhan said. “In the U.S., severe weather impacted both our U.S. and total company comp by nearly 3% during the quarter. The remainder of our challenges were attributable to fewer visits from our more occasional customers.”

Starbucks San Francisco

McDonald’s, known for menu items like the Quarter Pounder and Big Mac, said its first-quarter comparable sales went up 1.9%. In comparison, it showed increases of 3.4% in the prior quarter and 12.6% in 2023’s first quarter.

Chris Kempczinski, the CEO of McDonald’s, said it was “clear that broad-based consumer pressures persist around the world.”

McDonalds Sign

“Consumers continue to be even more discriminating with every dollar that they spend as they [face] elevated prices in their day-to-day spending, which is putting pressure on the QSR industry,” he said. “It is worth noting the Q1 industry traffic was flat to declining in the U.S., Australia, Canada, Germany, Japan and the U.K. And across almost all major markets, industry traffic is slowing.”

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Many quick-service restaurants, including McDonald’s, Yum! Brands and Starbucks, have been emphasizing value and deals amid the current economy that has pushed some consumers to prioritize eating at home more to save money.

And some others in the industry, meanwhile, experienced comparable sales growth in their most recently reported quarters. Chipotle and Restaurant Brands International were among them.

Yum! Brands, Starbucks and McDonald’s each have a major global presence, with each having tens of thousands of locations around the world.

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