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In 3Q09, many QSR operators are struggling to generate incremental visits.  Clearly, the only defense to declining traffic trends is discounting.  This puts QSR margins at risk as companies broaden their discounting schemes.  At the very least, any upside that may have been generated from lower food costs is now being given back to the consumer.

The following new menu changes/promotions signal ongoing guest traffic challenges for the QSR group.

Burger King announced last Friday that starting October 19th, it will be rolling out its $1 double cheeseburger; though some franchisees wanted to shelve the product to protect margins.

Chipotle announced last week that it will be offering free kids meals at its Boston restaurants for three days when a parent purchases a burrito, full-size salad or burrito bowl, or order of tacos.  CMG is running the promotion as a way to test its children’s menu, which is now available. 

I saw a MCD commercial yesterday in Chicago that said drip coffee is now available for $1.  While MCD is testing a $1 breakfast menu in Chicago, the commercial suggested you can get a $1 coffee all day long.  And, I have heard that the company is promoting “2 for 1” children’s meals in some markets. 

In this environment, what MCD does with its current discounting efforts affects nearly every restaurant operator in the country.  A client recently sent me this map of where MCD stores are located.  Yes, we need to pay attention to what MCD is doing!

QSR - INCREASED SIGNS OF PRESSURE - MCD map