Restaurant Brands International and Yum Brands operate eight mostly fast-food chains between them, and the collective results they reported on Tuesday reflect what has largely been the theme of 2024: It’s tough out there for a quick-service chain.
Well, except for Taco Bell.
The Mexican fast-food chain, owned by Yum Brands, reported 4% same-store sales growth, easily outdistancing the quick-service restaurant chains that have reported sales results thus far.
“Taco Bell can provide value with products that nobody else has,” Yum Brands CEO David Gibbs told analysts on Tuesday, according to a transcript on the financial services site AlphaSense. “If you think about it, Taco Bell can provide a product that’s a value product, that’s an innovative product, and that can help our franchisees’ margins. That’s an incredibly powerful set of tools we have in our toolbox that our competitors don’t.”
Taco Bell’s Yum Brands cohorts did not fare so well. KFC U.S., which has been struggling in recent quarters, reported a 5% domestic same-store sales decline. Pizza Hut’s U.S. same-store sales declined 1%.
Yum’s burger brand Habit’s same-store sales declined 5%. That was the fifth straight decline for the fast-casual chain, which Yum acquired in 2020.
At Restaurant Brands International, Tim Hortons’ same-store sales rose 2.3%. But that included 2.7% growth in Canada, where the bulk of the coffee and doughnut chain’s restaurants are located. That implies a decline in the U.S.
Burger King, RBI’s flagship concept, reported a 0.4% decline, moderately underperforming its two fast-food burger rivals McDonald’s and Wendy’s, both of which reported slight increases.
At Popeyes, KFC’s rival, same-store sales have slowed markedly since a strong start to the year, driven by chicken wings. Same-store sales at the chicken chain declined 3.8% last quarter.
At Firehouse Subs, RBI’s most recent acquisition, same-store sales declined 4.8%.
The collective results come on top of weak to negative same-store sales results from fast-food chains in the third quarter. McDonald’s same-store sales rose 0.3% in the U.S. Wendy’s same-store sales increase 0.2%. At Starbucks, traffic plunged 10%. El Pollo Loco’s traffic fell 7.6%.
Fast-food chains have lost much of their value reputation in the past couple of years after increasing prices 30% to 40% to offset the rising cost of food and labor. That has frustrated consumers, who do not like higher prices even when it means they’re making more money.
The current environment is “more complicated than we expected entering the year,” Restaurant Brands International Executive Chairman Patrick Doyle told investors on Tuesday, reflecting a commonly held view among fast-food executives.
Some brands that have been able to maintain their value reputation have been able to win over consumers. Taco Bell, which this year has unleashed a flurry of new items, including a Cantina Chicken menu, has been able to maintain its value reputation despite an otherwise difficult environment.
There is some good news for domestic quick-service chains. Many are reporting improving sales in October after the quarter ended. That includes both Burger King and Popeyes. For Burger King, an Addams Family Menu, including a purple bun Wednesday's Whopper, has performed well. At Popeyes, a shift to more value also helped improve results, the company said.
Yum Brands stock was up 2.5% through mid-morning Tuesday. RBI stock was down 3%.
UPDATE: This story has been updated to include quotes from both companies’ earnings calls and their stock price.
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