The fast food business is suddenly looking up.
For years, the industry suffered from a pervasive public perception that it serves unhealthy and overprocessed food.
Foot traffic and sales growth plunged, and many consumers turned instead to fast-casual restaurants such as Chipotle, Panera Bread, and Shake Shack — all chains that marketed their food as healthier and less processed than traditional fast-food.
Now, the tide is turning. People are returning to fast-food giants like McDonald’s, Burger King, and Wendy’s.
McDonald’s US same-store sales grew 5.4% in the first quarter. Burger King’s same-store sales grew 4.4%, and Wendy’s rose 3.7%.
The growth isn’t just limited to the biggest chains. Overall, same-store sales at traditional fast-food chains grew 2.7% in the first quarter of the year, Jonathan Maze reports at Nation’s Restaurant News. That metric grew just 0.3% at fast-casual chains over the same time period, by comparison.
The fast-food resurgence appears appears to be largely driven by the industry’s cheap prices.
McDonald’s, Wendy’s, KFC, and Burger King have all been offering steeply discounted combo meals and free-food offers to drive up traffic.
The promotions are working. Deal-based traffic to fast-food restaurants increased 3% in the first quarter, according to NPD Group. Promotions accounted for more than 25% of fast-food restaurants’ sales in the quarter, and roughly 35% of sales at fast-food burger chains.
Fast-food chains may also be benefitting from uncertainty about the economy, Nomura analyst Mark Kalinowski told Business Insider in a recent interview.
Whenever consumers are feeling uneasy about the economy, they tend to cut back on their budgets for dining out, which in turn can benefit the cheapest restaurants.
“The whole restaurant industry in aggregate is pretty lacklustre,” Kalinowski said. “Restaurant owners … hear a lot about how customers are worried about politics, and they don’t really care for either presidential candidate.”
At the same time, most major fast-food chains have been improving their public image by adding healthier options to their menus and taking certain measures like switching to cage-free eggs and removing antibiotics from their chicken supply.
Growth is still strong at major fast-casual chains like Panera and Shake Shack, which saw same-store sales grow by 6.2% and 9.9%, respectively, in the first quarter. But if current trends continue, McDonald’s same-store sales growth could catch up to them before long.
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