While the economic shutdown has decimated much of the restaurant industry, the junk food sector has suffered less than most others; some chains, in fact, are thriving.
Yum Brands, owner of KFC, Pizza Hut, and Taco Bell, reported sales were down only 2 percent in the third quarter compared to the same period in 2019. Starbucks’ sales were down 9 percent for the period, compared to a 41-percent plunge in this year’s second quarter.
For Texas-based Wingstop, which has 1,500 stores in nine countries, stores that have been open at least a year averaged an 18-percent growth in sales during the 12 months ended 26 September. The company plans to open as many as 140 new sites in its current fiscal year.
The key has been drive-up windows, which makes fast-food joints much more suited to offsite dining than conventional sit-down eateries.
In this year’s third quarter, Taco Bell served 30 million more cars than a year previous, Yum Brands CEO David Gibbs told analysts in an early November phone call. Wendy’s has a “new appetite” for opening drive-through-only locations, the Wall Street Journal reported on 7 November.
Still, the margins in the restaurant business are thin.
Domino’s Pizza reported food costs rose 3.8 percent in the third quarter as cheese prices surged, the company reported in its earnings statement, helping to drop third-quarter earnings to $2.49 a share, which was less than analysts expected.
Also, the pandemic has forced franchisees to spend for frequent store cleanings and protective equipment for employees, which has forced some owners deeper into debt.
Nonetheless, fast-food companies’ stock is at near record levels and private equity firms seem ready to push them higher.
Inspire Brands, backed by private equity money, already owns the Arby’s and Sonic chains and just agreed to pay $8.8 billion to acquire Dunkin’ Brands. The price is 20 percent higher than Dunkins’ already-record market valuation.
No Breakfast
With millions of workers jobless and millions more working at home, a key fast-food profit center has stalled.
Far fewer people are coming to breakfast.
Like other chains, Burger King has reported breakfast sales still lag, even though more people are gradually returning to work, the WSJ noted. IHOP and Dunkin’ chains, both dependent on breakfast eaters, have each announced plans to close hundreds of stores.
Weak breakfast sales were the main factor dragging down McDonald’s revenue during the shutdown, CEO Chris Kempczinski told analysts in a July earnings call.
The shutdown has disrupted chains’ plans for bigger breakfast menus.
Pancake house IHOP was planning a brand of hotcakes called Flip’d for people on the go. Other chains were developing items that would fit in cars’ cup holders, according to the Wall Street Journal.
Wendy’s had introduced new items, including a “Breakfast Baconator” sandwich made with a sausage patty, cheese, six strips of bacon, and “real eggs.” The sandwich was gaining popularity when shutdowns were imposed.
The shift from grabbing breakfast on the way to work to eating at home has shifted business toward breakfast-food makers, with sales of cereal and ground coffee rising, the Journal reported.
Kraft-Heinz, which makes Oscar Mayer bacon and Maxwell House coffee, is “in a position to own breakfast,” Carlos Abrams-Rivera, the company’s U.S. president, gloated to the WSJ.
Fast food’s breakfast business now is showing signs of reviving, with sales during the week of 25 October just 10 percent below those a year earlier, according to analysis firm NPD Group.
TREND FORECAST: We again note this data to note that despite what is being promoted by the business media as a growing, promising healthy food movement, in America, and in many other countries, more people are becoming addicted to fast, processed food, laden with salt, sugar and unpronounceable chemicals with devastating results to health than those going all natural.
While organic movements have grown substantially over the last two decades, organic in 2019 accounted for only 5.8 percent of the food sold in retail channels. Indeed, a walk through any major supermarket chain store shows how small the organic sections are and how limited the scope of product compared to the low quality, highly processed, non-organic aisles that dominate.
On the fast food front, an industry that had only $6 billion in revenue in 1970 and surged to over $200 billion in 2019, while major chains promise fresher ingredients with less additives and more vegetables, for the most part, Americans keep gobbling down burgers, fries and other fast food junk.
And it shows. With some 42 percent of Americans obese, it has become the new normal.
From middle America to the military ranks, coping not only with the physical and health effects of obesity but its emotional, societal and psychological effects and their ramifications are forming the Ready To Explode trend which is exploding into a public health emergency.
Indeed, as we have reported, those suffering from Type 2 diabetes and Obesity are also major victims of the coronavirus. According to the Centers for Disease Control and Prevention, “Obesity is a common, serious, and costly chronic disease. Having obesity puts people at risk for many other serious chronic diseases and increases the risk of severe illness from COVID-19.”
TREND FORECAST: Weight loss programs will bring in great financial gains. “Whole Health Healing” is a top trend this year and for decades to come. While many will remain overweight and out of shape, new millennium “New Agers” – those who are financially down and physically out – will be seeking new roads to find inner peace and self-satisfaction… that money can’t buy.
This will be a great OnTrendprenuer® opportunity for those with free minds to explore the world of natural healing remedies and treatments that are both easily accessible and affordable.
Looking good and feeling strong, self-confident, and self-reliant will be personal survival strategies for those wanting to move up as the world around them keeps going down.
