The restaurants winning and losing the fight for consumers
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
The fast-food industry's pain is fast casual's gain. Chipotle, Cava and Wingstop are running circles around the likes of McDonald's, Starbucks and KFC.
Why it matters: The price gap is shrinking between fast-food and fast-casual restaurants.
The big picture: A line has been drawn between restaurants crushing expectations and those falling short.
- An Axios analysis identified these publicly traded companies as having big gains or losses based on same-store sales discussed in recent earning reports.
Who's winning:
- Wingstop (28.7%)
- Cava (14.4%)
- Chipotle (11.1%)
- Sweetgreen (9%)
- Taco Bell (5%)
Who's losing:
- KFC (-5%)
- Papa John's (-4%)
- Starbucks (-2%)
- Pizza Hut (-1%)
- McDonald's (-0.7%)
Between the lines: Casual dining restaurants Chili's and Texas Roadhouse saw sales grow by 14.8% and 9.3% respectively.
- Taco Bell has been an exception to the fast-food sales slide.
Inflation hikes restaurant prices
Zoom in: Food costs have been on the rise with inflation but some restaurants have raised consumer prices more than others.
- Restaurant food prices increased by 30% from July 2019 to July 2024, according to the latest Consumer Price Index.
- 78% of 2,000 people surveyed by LendingTree said they now view fast food as a luxury,
What they're saying: Cava CEO Brett Schulman told Axios' Nathan Bomey that the fast-casual chain's prices have increased only 12% during those five years.
- "So our relative value proposition has only been magnified," he said.
- Wingstop CEO Michael Skipworth said during a recent earnings call that the company's disciplined approach to menu pricing over the years is paying dividends."
- David Gibbs, CEO of Yum! Brands, the parent company of KFC, Pizza Hut and Taco Bell, said providing "consumers affordable options has been an area of greater focus for us since last year."
Menu changes and value wars
Menu additions and limited-time promotions have been the main ways restaurants have been working to drive sales.
- Sweetgreen and Cava added steak to their menus in recent months, which the companies say has been successful.
- Starbucks' kicked off pumpkin spice season weeks after its disappointing earnings. The classic PSL drink is considered the chain's "most popular seasonal beverage."
The bottom line: GlobalData managing director Neil Saunders told Axios the biggest pullbacks seem to be in the fast-food segment because consumers are more focused on value.
- "With higher prices the value equation no longer balances," Saunders said. "By comparison, some of the fast-casual chains are doing better because they are seen as more of a treat and there are fewer expectations around very low prices."
- Saunders said the meal deal tactic will work to some degree, "but customers want permanently good value, not just the occasional meal deal and offer."
More from Axios:
