McDonald’s Restaurant in El Sobrante, California, October 23, 2024.
David Paul Morris | Bloomberg | Getty Images
Like a lion, like a lamb.
This is what restaurant executives envisioned in 2025 after a difficult start to the year, which is largely due to temperatures, wildfires and consumer caution.
Many restaurant chains Restaurant brand Burger King and Power Level, Say sales have improved In the fourth quarter, with the value supply bringing diners to home cooking. even McDonald’s Although same-store sales in the United States fell by 1.4%, domestic traffic is still growing.
But the trend reversed in January.
“We have started a year facing some traffic headwinds from the overall industry, which has intensified important weather events across the country.” Wendy’s Chief Financial Officer Kenneth Cook said on Thursday’s company call.
Net fast food sales rose 3.4% in January, but saw a slight decline in growth compared to the same period last year, compared with a 4.9% increase in December, according to the revenue management solution of the Restaurant Market Research firm. Traffic for breakfast and lunch is both declining this month.
“I think consumers are still on guard,” Metro U.S. President Doug Fry told CNBC. “I think they are waiting to understand the economy, but they are also unwilling to sacrifice this quality and part of the scale and The amount of what they eat. They want to find the best value for the dollars they spend.”
As the years progress, traffic and sales growth are expected to intensify, partly because of ease of comparisons compared to last year’s decline. Except for November, the monthly industry traffic is negative and sales will slide in the summer, which is usually the high point for restaurants.
“We expect to ease year-on-year comparisons over the summer months,” said restaurant brand CFO Sami Siddiqui.
January’s Bruce
Customers held a bag of food outside Chipotle restaurant in New York on January 12, 2024.
Angus Mordant | Bloomberg | Getty Images
January always brings lower temperatures, but this year also includes wildfires in Los Angeles and new uncertainties following President Donald Trump’s inauguration.
Chipotle Mexican Grill Wildfires are estimated to damage same-store traffic growth by 400 basis points, or 4%.
Overall, Chipotle restaurant traffic opened at least 2% a year in January compared to a year ago, hurt by weather and New Year’s Day falling on Wednesday. Chipotle CFO Adam Rymer told analysts that the company believes its same-store sales will be roughly flat in the first quarter.
Looking ahead to the second quarter, Chipotle also expects weak same-store sales as it faces comparisons to last year’s popular promotions. While the company predicts stronger sales in the second half of the year, its weaker forecasts in the coming months lead to 4% decrease In stocks.
At present, restaurants have not predicted any significant impact on the Trump administration’s trade war on their business. Chipotle imports half of its avocado supply from Mexico Understand concerns On how the current 25% suspension of the tariff will increase food costs. Neither the company nor Wendy and McDonald’s included new impacts 10% tariff in China and potential taxes in Mexico and Canada.
But consumers are concerned about the potential pressure on tariffs and wallets.
American consumer sentiment Seven months In February, families were worried about prices rising next year. already, Inflation in January The Labor Department said that food prices from home have risen 3.4% in the past 12 months.
Return in the second half
For chains planning a comeback, sales are expected to improve later this year.
McDonald’s, for example, is still waiting for its sales to rebound completely as the E. coli outbreak is associated with a quarter-pound burger, thus starting to weigh sales in mid-October. McDonald’s CEO Chris Kempczinski said on a corporate call on Monday that the fast food giant predicted demand will recover early in the second quarter.
Additionally, McDonald’s predicts sales growth will increase if overall consumer health increases.
“If the basic environment exceeds our initial expectations, especially with low-income consumers, we want to benefit disproportionately from our competitors,” said Ian Borden, Chief Financial Officer of McDonald’s.
See people leaving Starbucks in New York City on January 14, 2025.
Angela Weiss | AFP | Getty Images
Then Starbuckswhich will take a longer timeline to reverse its business. Coffee chain Same-store sales decline For four consecutive quarters, consumers choose to buy caffeine-containing beverages elsewhere.
Starbucks paused its fiscal 2025 outlook, so it offered no insight into the expected sales for that year. However, Starbucks chief financial officer Rachel Ruggeri told investors that the company’s revenue is expected to increase in the second half of its year.
“(EPS) is expected to be the lowest of the absolute basis (Q2) (due to seasonality, the organization I just talked about has reorganized and increased investments, and year-on-year growth in the quarter is also intensifying,” he said. She said in late January. “Earnings per share are then expected to improve in the second half of the fiscal year 2025, both in sequence and in full year.”
