Here Is What’s Going On With All Your Favorite Fast Food Chains
by Dan Mitchell, TIME Magazine*
It’s a war out there
The fast-food business may never have been in more flux than it is now. Higher food costs and increased competition are hitting the whole industry, while erstwhile mainstays (and not just McDonald’s) are dealing with ever-more-fickle consumers and new trends toward healthier fare. Given all that, it might seem surprising how well the industry as a whole (leaving out McDonald’s) is doing. Here’s a snapshot look at several of the biggest players.
One-year stock performance: down 5%
This is the big one. Tastes are shifting and lifestyles are changing, taking consumers away from the same-ol’, same-ol’. People seeking quick meals are looking for more quality, for which they’ll pay a little (but not too much) more at places like Chipotle, Starbucks, or the prepared-foods counter at the supermarket. And when they just want a burger, more of them are opting for higher-end fare like that served up by Five Guys and others. Or else they’re going to Burger King or Wendy’s, both of which have been concentrating on upgrading their image.
In response, CEO Steve Easterbrook is trying to remake the company. He’s initiated a global restructuring, slashed costs, and revamped menus—including all-day breakfast, new toppings, pastries (to keep more people from fleeing to Starbucks and Dunkin’ Donuts), and the new, $5 Sirloin Third Pound Burger. It will be a while before we can know how successful these initiatives might be, but it was more than clear that something radical needed to be done.
One-year stock performance: up 46%
The pizza chain’s TV commercial might elicit sniggers (“We’ve changed from Dominos Pizza to Dominos), but the strategy of adding new menu items like pasta and sandwiches — along with improving its pizza somewhat — seems to be working. In its latest quarter, Dominos reported that sales were up 11%, and same-store sales were up 16%.