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How does a corporate fast-food chain get out of a rut? Dreaming up a truly bizarre food combination is certainly one option.
At least that’s what some beleaguered stocks are resorting to in order to combat a spending downturn, rising prices, and a more health-conscious consumer.
Take McDonald’s, which pulled out all the stops to bring the beloved Snack Wrap back to the menu last month, after discontinuing the fan favorite in 2020. It’s no coincidence that this quarter, those golden arches saw a resurgence in sales: Global same-store sales jumped 3.8%, its biggest increase in roughly two years. In the US, that number climbed 2.5%, a huge comeback after two straight quarters of domestic declines. That wasn’t all: The company beat Wall Street projections on both earnings and revenue, sending shares up 3.03%.
McDonald’s credited its McCrispy chicken strips, which were added to the menu in May, and even a “Minecraft”-themed meal for boosting sales over the quarter. The company said it sold out of its collectible Minecraft figurines in under two weeks.
But that doesn’t mean it was all smiles for McDonald’s in the second quarter. The chain still reported weakened demand and cited poor economic health as a reason lower-income shoppers were bailing on the Big Mac. “Reengaging the low-income consumer is critical, as they typically visit our restaurants more frequently than middle- and high-income consumers,” CEO Chris Kempczinski said during the firm’s earnings call.
Yum Brands isn’t tasting so good
Yum Brands' problems make McDonald’s issues look like a Happy Meal.
Not only did its earnings and revenue come in below projections last quarter, but two of its core franchises—Pizza Hut and KFC—reported 1% and 5% declines in same-store sales, respectively.
Taco Bell, however, saw same-store sales growth of 4% over the quarter, thanks to…skillful management? An influx of cash flow? No—it also brought back its crispy chicken nuggets.
While that proved to be a success, some of Taco Bell's latest menu items are raising eyebrows instead of profits, such as the Baja Midnight Mountain Dew, or the Salted Caramel & Toffee Cream Empanada Bites.
Those sound great and all, but we’re still waiting for innovation that’s as transformative as Pizza Hut’s cheese-filled crust.—LB