This post is part of the On the Margin blog.
Fourth quarter earnings season isn’t quite over, but enough restaurant chains have released their numbers from the period to give us a good sense about how things went toward the end of the year.
The conclusion: If you sold burgers, pizza or breakfast and, preferably, two of three, things probably went well for you. So long as it was a limited service concept.
Here are a few notes from last year’s fourth quarter same-store sales results:
Where did Chipotle’s customers all go? Maybe the biggest surprise of the fourth quarter came from Qdoba, which said that same-store sales increased 1.8 percent. Sure, that came on top of a 14-percent increase the year before, but keep in mind that Chipotle Mexican Grill was, shall we say, really weak, its same-store sales having fallen 14.6 percent.
Qdoba was supposed to be the theoretical beneficiary on the public markets of Chipotle’s weakness. But at this point it is unclear where its customers are going. And now there are some analysts who worry whether people are getting tired of burritos.
. Seriously. McDonald’s Corp. same-store sales rose 5.7 percent after it started serving all-day breakfast. Taco Bell, buoyed by its new breakfast daypart, reported a 4-percent same-store sales increase. Denny’s and IHOP continue to find customers.
Privately held First Watch keeps expanding and a private equity group just pumped money into upstart family dining chain Black Bear Diner. We get it, already. People really love eggs and bacon and pancakes and they want them all day. It’s the low-hanging fruit in the restaurant business right now.
The casual dining business is not easy. We didn’t actually learn this in the fourth quarter. We knew this, for at least 10 years. But there are a lot of struggling concepts out there, including Famous Dave’s of America Inc., which reported a same-store sales decline of 10.6 percent at company-owned locations. Ignite Restaurant Group’s two concepts, Joe’s Crab Shack and Brick House Tavern, both saw same-store sales declines, as did all four of Bloomin’ Brands’ concepts.
It’s especially difficult for seafood chains. Red Lobster didn’t get its Beyoncé Bounce until the first quarter. But reports from the seafood chain have been strong even before then, which could explain why Bonefish Grill (down 5.4 percent) and Joe’s Crab Shack (down 2.9 percent) can’t seem to get momentum.
Pizza is still king. Pretty much everybody thought that Papa John’s International Inc. and Domino’s Pizza Inc. would lose some business in the fourth quarter after Pizza Hut started regaining some momentum. Then Papa John’s reported a 1.9-percent same-store sales increase, surprising some investors. And Domino’s reported domestic same-store sales of 10.7 percent that are so strong we still can’t quite believe it. I guess people just really, really like pizza.
Burgers beat chicken. McDonald’s, The Wendy’s Company and Burger King all generated good sales in the fourth quarter and even Jack in the Box — which complained about its competitors’ discounting tactics — saw same-store sales growth.
This, apparently, hurt Popeyes Louisiana Kitchen Inc., which said it lost sales because of that discounting. Its customers are frequent burger customers, apparently — proving that customers really don’t choose between chicken chains, but rather what they’re in the mood for at a given moment.