This is a reproduction of The Bottom Line newsletter, a look at the week in restaurant finance. Get the newsletter in your inbox every Monday by subscribing here.
So much for an improving restaurant market.
Fast-food chains unleashed a flurry of mostly-bad earnings results. McDonald’s had the best performance of any of the major burger chains and then acted on its call as if the world were crumbling.
The opposite was true at Yum Brands, where Taco Bell’s strong performance was enough for executives to largely skim over deep issues at KFC and Pizza Hut. Sweetgreen is laying off 10% of its corporate workforce.
But we will point out Wendy’s, which said its same-store sales fell 3.6%. Interim CEO Ken Cook told analysts flatly that the state of the economy took the company by surprise and that it wasn’t prepared for something different.
That’s a fair comment. Many prognosticators expected a better economy this year. That didn’t happen, because low-income diners are cutting back. And then the Trump Administration started pushing tariffs, which fed into fears of more inflation, and it all added up to another tough year.
And it’s all hitting fast-food the most. As we said this week, that market is tanking.
This week’s financial news
McDonald’s is so concerned about the economy right now it’s talking with franchisees about more national price points. That’s an issue worth watching.
What do you do when you can’t fix your core chicken brand? Apparently you start another one.
Dutch Bros is on fire right now. No wonder everybody wants to sell more beverages now.
So is Potbelly, just as everybody expected.
Texas is no longer so friendly to Portillo’s. And it’s probably not helping Jack in the Box.
Philz Coffee is sold to a private-equity firm. But its valuation isn’t what it once was.
I can’t quite remember when the last time we’ve had turnover in the CEO position like we’re having right now.
Burger King is good at operating restaurants, apparently. But it’s still speeding up its refranchising.
Apparently, if you focus on the product for which you are known, your sales go up.
Another EYM Group subsidiary has filed for bankruptcy.
Number of the week
McDonald’s is looking for more national price points. Its menu prices vary considerably based on labor and real estate costs, among other things.
Quote of the week
“We recognize that consumers’ value perceptions are most influenced by our core menu pricing. We’re working closely and collaboratively with our U.S. franchisees on this opportunity, and we’re developing ideas for how we might address this as an entire system.” -Chris Kempczinski, McDonald’s CEO, on the company’s menu pricing effort.
On the blog
I wrote about the fast-food market, Yum Brands and franchising. Check out all my blog posts on The Bottom Line.
On the podcast
I had a great conversation with Bernard Acoca, CEO of the chicken chain Zaxbys, for A Deeper Dive. On The Week in Restaurants we talked about casual dining beating fast-food.