Mike Elrod’s Post

"Value meal wars heat up as more fast food spots, restaurants offer discounted menu items" 🍔 🌮 🍕 As more and more brands chase Foot Traffic it's important to remember a very simple rubric: at a 25% discount and 50% gross margin, you have to 2x (❗) your sales to realize the same overall gross profit 😳 Wendy's , Starbucks, Chili's, et al are definitely seeing traffic bumps via the value meals...but does the profit from the incremental traffic cover the reduced margin on expected sales? That's a lot less certain...especially for the Franchisees 😐 One McDonald's franchisee group recently put it bluntly: “There simply is not enough profit to discount 30% for this model to be sustainable" Relevant links in the comments! h/t: Talon.One & Sam Panzer for the snazzy chart 🙌 Placer.ai Upside NACS

Promotions that don’t generate enough volume to turn a profit can lead to lower EBITDA margins, particularly for franchisees. The restauarnt value menu market is crowded and running traffic-driving promotions is more important than ever. How do you use data to take a more predictable approach on promotions?

With fast-food prices skyrocketing and consumers turning to grocery stores instead, big chains like McDonald’s, Burger King, Taco Bell, and Wendy’s are bringing back the value meal. Fast food, once known for affordability, has seen prices jump 27% since 2019, making it a luxury for many. As sales saw a decline in the second quarter of 2024, these chains are rolling out $5 or less meal deals to win customers back. Taco Bell kicked off the trend with its Cravings Menu in January, sparking what’s now being called the "Value Meal War". The hope? These budget-friendly meals will entice customers to return and maybe order a few more regular-priced items. In fact, McDonald’s has already seen some positive signs of increased traffic and even extended their value deals beyond their original limited-time offer. But it’s not all smooth sailing. Some franchise owners are feeling the pressure as lowering prices can squeeze already tight margins especially with rising labour costs in states like California and New York. Even so, experts believe these value menus will be sticking around for the foreseeable future to entice price-conscious consumers.

Here's a quarterly update video interview featuring Sean Black, CIO of Happy Belly Food Group (CSE:HBFG). I love companies that have highly-motivated, domain experienced management teams that have worked well before. Putting the band back together again can be powerful in terms of team chemistry and seeing a company hit the ground running. Happy Belly is a good example of this, back in 2013 they sold some of their franchised restaurant brands to MTY Food Group and then again, monetized restaurant brands in 2021, selling assets to Recipe Unlimited Corporation (now Fairfax Financial Holdings Limited). They provided speculative microcap investors with a groundfloor opportunity when they stepped in to refocus a struggling plant-based CSE stock back in 2022. Since then, they have been executing QoQ...8 record quarters in a row and seen the share price rise by more than 600%. This isn't a quick promote-type stock that enters a quickly becoming crowded buzzy sector, this is a management team that are doing what's in their DNA and they've grown up doing for most of their lives. This isn't financial advice at all but if you are a microcap investor, this recent interview might be worth your time to assist with your due diligence and at the very least you'll hear from someone who created a restaurant brand that you've likely eaten at. ✌ 🎤 💧

📣 The UK's Chicken QSR Boom: Opportunity or Overcrowding? 🍗 Meaningful Vision Ltd Our latest report dives deep into this rapid expansion, analysing the impact of new entrants and the potential for market saturation. 📌 Explosive Growth: Chicken chains saw a 12.3% increase in store numbers in the first nine months of 2024. 📌 Cannibalisation Concerns: Established chains faced a 3.5% decline in traffic. 📌 Regional Dynamics: The West Midlands and North West led in new store openings. Talk to our experts to learn how you can capitalise on these trends. https://lnkd.in/efGze8jm #FastFood #UKMarket #ChickenWars #RestaurantTrends #MeaningfulVision

📃 Quarterly Update: Happy Belly Food Group (CSE:HBFG) Sector: Consumer Cyclical, QSR Restaurants Tickers: $HBFG.C | OTC: HBFGF Avg Daily Vol: 155k Market Cap: Approx. CAD $56M Insider Ownership: Approx. 23% Fully Diluted: 36% 📹 Watch Here → https://lnkd.in/gFztX7YS 👉 Recently Announced an Above-Market Convertible Note with Toronto-Based Institutional Investor (K2). 👉 326 Financially committed franchised locations with Area Developers. 👉 2024 - 3 opened and 14 locations under construction with an annual goal of 15 to 25 new locations opened. 👉 QSR division recently became EBITDA positive and most of the revenues now come from this division. You'll want to watch the video as Sean Black breaks down the targeted annual revenues per franchised location and drops some juicy details about the margins one can achieve from royalty revenue streams. * Not investment advice. Not sponsored content. But we ARE shareholders and as such are biased.

A&W Restaurants, Inc.’s 105-year journey through economic challenges shows the power of resilience and quality. After being acquired by franchisees in 2011, A&W, under CEO Kevin Bazner, focused on its core values to drive growth. Here is a quick summary from the full article • U.S. quick-service traffic is down, but A&W grew same-store sales by 3.7% in the first half of 2024. • A focus on quality and nostalgia, like making root beer fresh in-store daily, has set A&W apart. • Rather than discounting, the brand emphasizes premium offerings, with innovations like the French Onion Double Cheeseburger outperforming forecasts. • A&W is expanding delivery and growing its franchise network, with plans for Walmart and non-traditional locations. A&W’s strategy proves that quality and innovation can thrive, even in challenging times. https://lnkd.in/gsTZnec7 #FranchiseGrowth #QSR #AandW #RestaurantIndustry #Innovation #Quality Danny Klein

Value was the name of the game in Q3. Pizza chains that leaned into value offerings made gains, while those that didn’t faced sales declines. Not mentioned in the article is the competition fast heating up between major brands and independent pizza operators.

Pizza chains might achieve a turnaround faster than burger chains, witnessing a growth in the second half of fiscal year (FY) 2024, as per a report by financial services organisation Prabhudas Lilladher. Click on the link below to know more... PRABHUDAS LILLADHER I Sandip Raichura #pizzachains #burgerbrands #qsr #qsrchain #report #fastfoodbrands #retailnews #retailtrends #retailsector #retailindustry #retailing #retailresults #retailupdates #businessnews #retailgrowth #retailindia #retailsectornews #retailresults #retailtrends #retailbusiness #ir #IndiaRetailing

Dwindling traffic at QSR restaurants remains a challenge with revenue down on pre-covid levels. The aim of discounting is to get more customers through the door as this presents an opportunity to upsell additional higher margin items to the consumers purchasing the discounted meals. I always wonder what the financial impact of these decisions by the franchisor has on their supply partners and franchisees. Is discounting just a lazy way of wooing customers for a short period of time, hoping that they’ll keep coming back? Are there other ways to keep customers coming back for more? How are some of the newer entrants in the market achieving growth, what are they doing differently?