Fast food chains report profits in US as inflation weighs on pricier restaurants

Amid rising food prices due to inflation, fast food giants have emerged as the winner in the United States in terms of earnings. As per a CNBC report, a pattern has been seen in the food industry, with fast-food chains appealing to a broader section of customers rather than casual-dining ones or pricier restaurants. McDonald’s, for instance, saw its US same-store sales jump 10.3 percent, aided in part by low-income consumers returning more regularly than in the previous two quarters. Likewise, Taco Bell’s domestic same-store sales soared 11 percent, as per a CNBC report. The development comes as the hospitality industry struggles with economic uncertainty. McDonald’s executives credited the hike in its sales to the annual return of the McRib as well as the success of its Adult Happy Meal promotion. Apart from that, Pizza Hut’s same-store sales in the United States grew 4 percent, while KFC’s rose 1 percent as the chain faced tough year-ago comparisons. This is in stark contrast to Chipotle, whose revenue fell short of Wall Street’s estimates for the first time in half a decade. The reasons for it include seasonality, bad weather, tough comparisons to last year’s brisket launch and subpar performance of products like the Garlic Guajillo Steak. For more than a decade, casual-dining restaurants have struggled to attract customers due to the increasing popularity of fast-food chains. Brands like Applebee’s and Red Lobster have turned to offering big discounts or increased their spending on advertising. This is particularly true for companies like Brinker International, which is trying to turn Chili’s Grill and Bar profitable once again. Chili’s reported 7.6 percent fall in traffic for the quarter ended 28 December. The brand has increased its prices and cut down on coupons as part of its strategy to offload less profitable transactions. More full-time restaurants are expected to reveal their results later in February. Similarly fast-casual chains like Shake Shack and Sweetgreen will announce their earnings for the previous quarter in the coming weeks. Shake Shack, which had announced that its preliminary same-store sales growth fell short of estimates, will reveal its fourth-quarter earnings on 16 February. Sweetgreen will reveal its revenues on 23 February. Read all the Latest News, Trending News, Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.