MCD Japan Raising Prices
The hikes follow previous increases in March and September last year as Japan grapples with inflation and a rising yen that has made imported ingredients more expensive.
The Japanese operator of McDonald's restaurants announced its third price hike in less than a year on Friday in the latest sign of compounding inflationary pressures on the nation's consumers. McDonald's Holding Company Japan Ltd said it would raise prices on about 80% of its menu from Jan. 16, citing currency fluctuations and surging costs for materials, labor, transportation, and energy. Also, according to Bloomberg, McDonald’s Corp. is exiting Kazakhstan after disruptions triggered by the invasion of Ukraine left the central Asian nation without a substitute for Russian meat supplies. “Fast-food restaurants managed by TOO Food Solutions KZ will cease to work under the McDonald’s brand in Kazakhstan because of supply limitations,” its local franchisee said in a statement on Thursday. It said that a date for reopening sites under a new name would be announced shortly.
ICR Conference PRIMER
The ICR Conference is one of the largest consumer investment conferences of the year. Numerous companies in Restaurants and Consumer Staples are scheduled to present at the ICR Conference on January 9 and 10. We have published a Primer to provide a reference guide for many of the presenting companies in our Restaurants and Consumer Staples sectors. The Primer provides an investment summary for our focus companies presenting at the conference. Each company section provides an investment overview, brief company synopsis, and questions/discussion points for the management teams. Make sure to bring our Primer with you to the conference.
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Conference Primer Download: CLICK HERE
Burger King Bankruptcy
Credit rating agencies downgraded multiple Burger King operators last year over such challenges.
A 90-unit Burger King operator with locations in four states declared bankruptcy this week, blaming the pandemic and subsequent inflation challenges for draining its cash flow and making it unable to pay its debt. The company is one of the burger chain's largest franchisees and operates locations in Illinois, Ohio, Pennsylvania and Virginia. According to court documents, it filed for Chapter 11 bankruptcy protection with $35.5 million in secured debt and another $14 million in unsecured obligations. TOMS plans to sell its restaurants through the bankruptcy process. TOMS, in court filings, said that its business “suffered significantly from [a] loss of foot traffic, resulting in declining revenue without proportionate decreases in rental obligations, debt service, and other liabilities.” The bankruptcy filing follows a challenging period for Burger King in general. The chain’s sales struggled going into the pandemic and didn’t recover in 2020 and 2021, even as competitors like McDonald’s and Wendy’s reported strong sales. Some key marketing efforts also failed, such as its 2021 introduction of a hand-breaded chicken sandwich. While Burger King has overhauled management and its parent company is investing $400 million into the brand’s revitalization, the combination of weak sales and soaring food and labor costs hurt the chain’s operators.
