For the most part, fast-food restaurant sales have been weak this year, the result of consumer frustration over high menu prices and years of inflation sapping the buying power of working-class diners. Pretty much every quick-service chain outside of Taco Bell is seeing weak overall results.
But a few chains are pointing to a better October.
McDonald’s, before its E. coli outbreak, generated strong results from its Chicken Big Mac. Wendy’s, meanwhile, gained traction with its Krabby Patty Kollab, a tie-in with the Nickelodeon program Spongebob SquarePants featuring a Krabby Patty Kollab burger. Both products have generally received mixed reviews, but that didn’t keep customers from trying them.
Add two more to the list. Restaurant Brands International said on Tuesday that sales improved at Burger King and Popeyes in October.
Both brands had been scuffling over the summer. Burger King’s same-store sales declined 0.4%. Popeyes fared worse, down 3.8%. Executives provided differing explanations for each brand’s October turnaround.
At Burger King, a tie-in with the Addams Family cartoon, featuring Wednesday’s Whopper, Churro Fries and “Morticia’s Kooky Chocolate Shake,’ generated strong sales results. “Those did fantastic,” RBI CEO Josh Kobza said. “I think when we get the marketing right, and when we really focus on the Whopper, we tend to do well. And I think that helped us take some share here in the short-term.”
At Popeyes, however, the company said that it shifted to more value, including three pieces of chicken for $5 in mid-September and then a $6 Big Box in early October. Both offers have driven sales and traffic improvements.
“In a more value-sensitive environment this quarter, Popeyes’ calendar was missing some of the offers consumers were looking for, and this resulted in softer comps,” Kobza said.
Still, as we’ve noted before, the right marketing can prompt consumers to dine out at quick-service restaurants, and each of these chains have demonstrated that last month.
At the same time, most quick-service chains have been running marketing promotions of one type or the other all year long. It’s difficult to simply say that fast-food marketing simply “didn’t resonate” with consumers only to have them all suddenly resonate once the calendar turns to October.
Which is to say that lower gas prices and easing overall inflation may be giving consumers more financial freedom to dine out a bit more often, particularly when they do see innovative products.
Kobza cited “some positive signs on the overall consumer” on Tuesday. “If you look at a few of the things that help our guests out, things like inflation, have been persistently trending down,” he said. “Gas prices have come down a little bit recently and interest rates have started to come down.”
“It’s early,” he added. “But I think there are some positive signs for overall industry demand as well that are a bit encouraging to us.”
The most recent, weak jobs report notwithstanding, consumers for the most part have jobs, which generally fuels their dining. Wages are outpacing inflation. And lower gas prices this fall are feeding into that sense that the inflationary period that dominated most of 2024 is easing.
As the Popeyes situation demonstrates, it’s also worth noting that some consumers still expect value, and that needs to be at least part of the marketing effort. And McDonald’s is apparently working on plans that will largely keep value a major part of the equation for months. It also remains early.
Yet the outlook for sales in the fast-food space is clearly improving.