When economic times get tough, fast food is one industry that feels less impact -- people who might have otherwise gone to more expensive restaurants start eating there more while the lowest earners continue buying value meals because, in many parts of the country, buying the ingredients and cooking food at home is even less accessible.
This was, at least, the story throughout last summer and fall -- a report from Placer.ai found that even though overall restaurant visits fell by a respective 7.6% and 13.7% in July and August, McDonald's (MCD) traffic rose by 4.7% and 3.1%.
Rising Traffic And (Slightly) Falling Fast Food Traffic
When looking overall at quick-service restaurants that include both big chains Restaurant Brands International (QSR)-owned Burger King and any number of small spots that exist all over the country, traffic has not been as strong in the last quarter of 2022. According to the latest report from Revenue Management Solutions, traffic in quick-service restaurants is down 4.2% year-over-year and 0.7% from the previous quarter.
The average price of an item at a fast-food restaurant, meanwhile, is up 16.2% year-over-year. Even if the increase reflects months of skyrocketing inflation earlier in the year, between the third and fourth quarters, prices rose only 1% and actually reflect stabilization from the summer.
Net sales, meanwhile, are still strong at a 6.1% year-over-year increase while the average check is now 10.7% more expensive than it was at the end of 2021. To put that in perspective, the average person at a fast-food restaurant will be $5.35 where they would have a year ago paid $5 -- a price increase that some are handling by ordering fewer or less expensive items.
"Sales continue to be fueled by average check increases (+10.7%), which are, in turn, driven mainly by average price," reads the Revenue Management Solutions report. "Quantity per transaction declined more sharply (-4.8%), indicating that more customers are managing their checks at a higher rate by reducing the number of items they purchase."
Image source: Ezra Acayan/Getty Images
This One Fast Food Chain Is Defying All Expectations
Another traffic change reflects predictable patterns as the U.S. put most pandemic restrictions behind it -- dine-in traffic rose 31.1% year-over-year in the fourth quarter of 2022 while drive-thru visits fell 12.2% even if it remains stable for the year overall.
Takeout is also up 22.1% while delivery is up 15.9% year-over-year but down just over 4% from the last quarter. The numbers, however, reflect a wider picture of quick-service restaurant visits in general.
Perhaps due to people being more likely to spend their money on what they know, certain large fast-food chains manage to break wider economic trends and defy expectations; according to the latest Placer.ai data, McDonald's visits were up 26.2% in the Q422 while Chipotle (CMG) traffic was up 28.7%. The latter opened nearly 600 new stores between now and 2019 for a grand total of 3,100 locations by the end of 2022.
"The strength of these brands is even more impressive when compared to the recent performance of the wider QSR and fast casual dining categories," reads the Placer.ai report. "Consumers are increasingly conscious of how they spend their money, with many choosing to dine out less frequently than they previously may have – and restaurants are feeling the effects of these decisions."
