Big QSRs see positives in first quarter, reports Scoreboard
The big three QSR players had some decent results in the first quarter. McDonald’s reported a leading 4.5 percent same-store sales growth in the U.S. (5.4 percent globally). Wendy’s was next, up 1.3 percent in same-store sales in the U.S. (3.3 percent globally) and Burger King was flat with 0.4 percent same-store sales in the U.S. (2.2 percent globally).
Global operations were a strong driver for them all, but U.S. traffic remained negative or flat across the board, so all that sales growth is from moving people up the menu or being more strategic about value. Wendy’s has been especially successful there, steering away from deep discounts.
Andrew Charles, an analyst at research firm Cowen, said that strategy paid off.
“The strategy to pivot away from sub-$3 price points in 2H18 that weighed on mix and did not drive a corresponding lift in traffic proved successful in 1Q, as comps sequentially accelerated,” wrote Charles.
A trio of $5 value meals drove unit-level margins higher than deep discounting at Wendy’s. The company is also investing in technology to speed up drive-thru times and more successfully integrate third-party delivery, available in 75 percent of the system.
McDonald’s is especially thriving with technology and facility investments. The company announced that it had completed 400 updates in Q1, and planned for 2,000 in 2019 with another 2,000 in 2020 as it nears a complete the Experience of the Future update. CFO Kevin Ozan said it’s starting to move the needle.
“We are now seeing an overall net positive contribution to comp sales from our aggressive modernization efforts,” said Ozan during the Q1 earnings call. “This means that the sales lifts from completed projects now exceed the downtime impact.”
The company has also found success with bacon and donuts, low hanging fruit to be sure, but two successful LTOs that added little complexity but boosted sales.
Burger King led the way on product innovation. During the quarter, the company introduced spicy nuggets, raising the price from $1 to $1.49 and has more ahead.
The biggest innovation, however, came the day after the quarter ended. BK’s rollout of the plant-based Impossible Burger drove a lot of traffic and a strong marketing backdrop generated “$6 billion in media impressions.”