Fast-food restaurants are hit hardest as customers cut back-food restaurants are hit hardest as customers cut back

[pstokely]

and they blame Biden

https://www.restaurantbusinessonline.com/financing/fast-food-restaurants-are-hit-hardest-customers-cut-back

“It’s tougher out there this year … than what we expected at the beginning of the year,” Sysco CEO Kevin Hourican told investors on the company’s Investor Day presentation on Tuesday, according to a transcript on the financial services site AlphaSense. “Consumer confidence has been impacted. Our belief is that it’s inflation-based.”

Quick-service restaurants have been hit hardest, he said. “You can see it across our portfolio of customers that we serve, from QSR to higher-end-QSR, that’s been hit the hardest,” Hourican said.

He believes that is rooted in the struggles of lower-income consumers, which make up a substantial number of customers at fast-food restaurants.

“The lower-income customer, it’s struggling more than the higher-income customer,” Hourican said. “There is some softening, we believe, tied to menu prices.”

[Blues Heron]

1. "The lower-income customer, it's struggling more than the higher-income customer,"

thats what they think of their customers - as non-human consumption units

[hatrack]

4. "It" - good catch.

[Think. Again.]

2. Finally we can get back to healthy diets.

[FBaggins]

3. Seems like a perfectly natural response to price increases

Prices at fast food restaurants have dramatically outpaced inflation overall.

In my area - the gap between fast food and sit-down casual restaurants is effectively gone - as their prices have not increased as quickly. That naturally shifts demand

[multigraincracker]

13. Not all that fast anymore either.

Not sure adding 2 lines at the drive thru speeded up. Then they ignore those that order inside.

[dalton99a]

5. Stop doubling your prices, greedy assholes

[multigraincracker]

14. Ten bucks for a #1,

Big Mac meal?

[werdna]

6. What is happening here is not inflation.

"As the demand for a particular good or service increases, the available supply decreases. When fewer items are available, consumers are willing to pay more to obtain the item—as outlined in the economic principle of supply and demand. The result is higher prices due to demand-pull inflation."
https://www.investopedia.com/ask/answers/111314/what-causes-inflation-and-does-anyone-gain-it.asp

There is an over supply of food items available to distribute to fast food and comfort food chains due to the steep rise in inflation during the pandemic. When toilet paper and sanitizing products disappeared from the shelves, the cost of those products increased accordingly. That's inflation. When all prices on all products increased as well due to supply line snags, that was inflation. When those issues were resolved, prices should have stabilized and eventually gone back down, deflation. That didn't happen, prices kept rising. That's GREEDFLATION. As fast food prices rose as well, GREEDFLATION as well, since most fast food corporations own the companies that produce and deliver their products, people ate at those places less. the corporations refused to lower the prices as a matter of principal, and instead created a new business model where the increased prices more, down sized staff and management to reduce labor costs and relied on less consumers to foot the bill.

[dalton99a]

7. +1. "Inflation-based," my ass

[unblock]

9. it's all "inflation" from an economist's perspective, but there are different kinds and causes of inflation

you're exactly right that the covid disruption might have been merely a temporary inflation as people wanted to increase their home inventory or toilet paper and such, and then return their home inventories to normal levels after the pandemic.

but there are a few things that have changed longer term.

first, the federal government threw a ton of money into the economy, fairly haphazardly, to avoid a collapse of the economy. in retrospect, this was somewhat overdone (government is usually far short and late when trying to stimulate the economy) as "work from home" as far more successful than anyone predicted. at least some of this money worked its way to the lower and middle classes, putting them in a better position to afford higher food prices.

second, thanks to the above and other factors, we've had incredibly low unemployment numbers for the longer period in at least half a century. again, this means the lower and middle classes are in a better position to afford higher prices.

third, takeout services such as uber eats are making restaurants more convenient to more people. not that the poor are happily paying even more for an convenient but usually unnecessary service, but more of the better-off customers are likely "eating out in" more often because of this.

fourth, real estate prices have been on a tear, so homeowners are able to tap into this with home equity loans and have more available to spend. doesn't help renters, of course, in fact it hurts them once their rent goes up; but on the whole it helps increase demand for restaurants.


all of which means that demand is higher longer term than before covid. with their customer base a little better off, the fast food industry shifted to grab a piece of the pie. hence, higher prices. fewer customers, but not enough to offset the higher profit margin.

this is all "inflation" but it's for more complicated reasons than simply "we're running low on supply". i have mixed feelings about the term "greedflation". i think it does get at what the nature of the inflation we're seeing, but "greed" is a constant. businesses are *always* looking to adjust prices to increase profits. the question is why is this working now when it didn't work pre-covid? and i think the above points help explain why. in short, the consumer is now better off than it was before.


now, of course, the problem with inflation is that it doesn't affect everyone the same, in the sense that not everyone's wage increased to cover the extra costs. but in the aggregate, with fewer people unemployed and more, particularly at the low end, making somewhat higher wages with minimum wages going up in some areas and nearby wages adjusting upward as well, as a whole, the fast food consumer base is better able to afford the higher prices.

those who were already employed probably aren't seeing any wage increases, or at least aren't beating inflation, and they are understandably not happy with the price increases. but there are apparently enough other consumers better off for this to be a successful pricing policy for the fast-food industry.


people forget the modest inflation is actually an entirely normal part of a decently strong economy. it's not the fun part, but it happens, nearly always, in fact. so my take in this case is that it's actually *evidence* of a decently strong economy. in know that's not a great political selling point, but from a economist's point of view, i think it makes sense.

[pecosbob]

8. The Roark Group owns half the franchises in the country.

They lobby against minimum wage increases while they rake in billions. Fuck them.

Sonic
Arby's
Carl's Jr.
Baskin & Robbins
Jimmy John's
Buffalo Wild Wings
Dunkin' Donuts
Cinnabon
The Cheesecake Factory
Hardees
Maaco
Meineke
Subway

Roark Capital Management, LLC, also known as Roark Capital Group or simply Roark Capital, is an American private equity firm with around $37 billion in assets under management. The firm is focused on leveraged buyout investments in middle-market companies, primarily in the franchise/multi-location, restaurant and food, health and wellness, and business services sectors. It is named for Howard Roark, the protagonist in Ayn Rand's novel The Fountainhead. The firm says that its name is not meant to connote any particular political philosophy but instead signify the firm's admiration for the iconoclastic qualities of independence and self-assurance embodied by the central figure in The Fountainhead.

-wikipedia

[Takket]

10. Wait people with less money have a harder time paying for things than people with more money?

Can y’all explain this concept to me? I’m not an economist.



Seriously what this companies are all facing is an inevitable backlash from their own greed. Ever since Covid companies have just been raising prices at will and blaming inflation and supply chain and Covid and blah blah blah. And that isn’t all the fast food companies fault. Some of it is but their suppliers are pulling the same bullshit on them.

Couple that with many people refusing to work for wages that make no difference in their lives and suddenly you have a problem.

But I think especially with food products so much of the cost increases were NOT organic. I think these companies say “what are people going to do? NOT eat? If we keep squeezing them they are going to give up a vacation or buying a new car, not food!”

So did the cost of a Big Mac go up a dollar? Okay we’ll raise the price $1.50, blame inflation, and that other 50 cents goes right in our shareholders’ pockets. There have been numerous articles posted on DU about how much inflation has just been driven by increasing profits. Not actual operational costs.

[ProudMNDemocrat]

11. The Chic-Fil-A near me is always lined up with cars all parts of the day.

I walk by there on my way to the gym and see tons of cars going in and out.

I personally do not eat fast food for health reasons.

[Prairie Gates]

12. We raised labor costs; the owners thought they would just pass that on 100% to consumers

Consumers say no.

So, the owners can decide to take a slight haircut on the massive profits they were making at the lower labor costs, or take a big loss by being abandoned by consumers.

I know it's hard for the uber-capitalists among us to understand this, but sometimes owners have to take less profit to keep the business in good standing and growing. It would not be hard to understand if you were not screwy eyed hypnotized by capitalist nonsense.