Fast-Food Chains Are Growing Again, With a Few Exceeding Prepandemic Trajectories

The largest fast-food chains in the U.S. have not only recovered from the ongoing pandemic in terms of sales, most of them are now growing at a clip that exceeds pre-Covid levels, according to the latest round of quarterly earnings. Fueling the growth is a combination of new product offerings, promotions, some creative marketing and perhaps a little pent-up demand. This year alone has seen several chains introduce new chicken sandwiches from familiar names as well as regional players, including McDonald's, Wendy's, KFC, Zaxby's (which recently nabbed an investment from Goldman Sachs), Golden Chick (which has some 190 locations largely in the South), and Checkers & Rally's, among others. Wendy's and McDonald's have perhaps been among the most aggressive in product development, adding a mix of new breakfast items to complement their latest sandwich offerings. It's paid off in their earnings. Wendy’s continues to benefit from its new offerings, which also include an upgraded version of its pretzel bun, with same-store sales growth of 7% in the U.S. for the third quarter ended Sept. 27. That compares to 4.5% for the same period a year prior. Comparable sales at Wendy’s grew 6.1% globally. On the other hand, McDonald’s is generating growth on par with its prepandemic trajectory. The brand reported comparable sales growth of 4.6% in the U.S. for the third quarter ended Sept. 30 versus with 4.8% a year ago. Globally, however, the world’s largest fast-food chain saw same-store sales continue to decline, though at a lower rate, falling 2.2%. Pizza chains, for their part, are simply cashing in on doing what they've always done, continuing to eclipse their performance in recent years. In fact, Papa John’s had the biggest comparable sales growth of the largest, publicly held chains in the U.S. with an increase in North America of 23.8% in the third quarter ended Sept. 27. That compares with a mere 1% growth during the same period a year ago. Internationally, Papa John’s same-store sales grew an equally impressive 20.7%. Domino’s, similarly, reported comparable sales growth of 17.5% in the U.S. for the third quarter ended Sept. 6, versus an increase of 2.4% a year ago. Internationally, same-store sales at the company grew 6.2%. It's not just pizza that's proving popular. Burger chain Jack in the Box and chicken specialist Popeyes joined the pizza chains in the double-digit growth club. Jack in the Box said same-store sales grew 12.2% in the U.S. for the fourth quarter ended Sept. 27. That compares with growth of 3% for the same period a year prior. Popeyes continued to capitalize on the popularity of its chicken sandwich, for which there appears to be no slowing down, by reporting comparable sales growth of 19.7% in the U.S. versus 10.2% a year ago. Globally, same-store sales at the chicken chain grew 17.4%. Fast-casual chain Chipotle also continues to shine, with more than respectable same-store sales growth of 8.3% for the third quarter ended Sept. 30, though it was below an increase of 11% a year ago. However, across conglomerates, the recovery trajectory differs from chain to chain. While Popeyes is the jewel in the crown of Restaurant Brands International as far as sales are concerned, its other brands Burger King and coffee chain Tim Hortons continue to struggle somewhat. Burger King, for example, saw same-store sales declines of 3.2% in the U.S. and 7% globally, while Tim Hortons fell 13.7% in its home market of Canada and 12.5% globally. Yum! Brands provided tantalizing numbers domestically for its largest brands during the third quarter ended Sept. 30. Pizza Hut, for example, saw same-store sales growth of 6% in the U.S. versus a decline of 3% a year ago. Globally, the pizza chain’s comparable sales fell 3%. KFC saw a boost in its same-store sales of 9% in the U.S. versus a decrease of 1% for the same period a year prior. Globally, the chicken chain saw comparable sales fall 4%. Taco Bell was close to matching its year-ago results with same-store sales growth of 3% globally versus 4% for the same period a year ago.