Why Restaurant Chains Are Making A Comeback | CNBC Marathon

"Why Restaurant Chains Are Making A Comeback | CNBC Marathon"

https://youtu.be/gx1DHHrxE6k?si=8CpYw7muphZv6vbj

• Chili’s Turnaround (Published September 2024)

• Chili’s, under Brinker International, saw a 15% sales increase in Q4 2024, with record-high revenue of $4.4 billion in fiscal 2024.

• CEO Kevin Hochman (since 2022) simplified the menu by 20%, improved restaurant operations, and invested $200 million in upgrades.

• Social media, especially viral TikTok posts about mozzarella sticks (Triple Dipper), drove 40% of recent growth; the $10.99 Big Smasher meal contributed to the rest.

• Chili’s positioned itself as a better-value alternative to fast food, with increased staffing and advertising ($14 million more in Q4 2024).

• Challenges: Sustaining growth, balancing low-margin value deals with high-margin items like alcohol and appetizers.

• Wingstop’s Growth (Published August 2024)

• Wingstop grew to 2,352 locations globally, with stock up 1,100% since 2015 and 300% in five years.

• Same-store sales rose nearly 30% in Q2 2024, driven by increased transactions and new menu items like chicken sandwiches (introduced 2022).

• Low operational costs (small store size, efficient labor) and 70% digital orders support profitability; franchisees recover $500,000 investment in under two years.

• Strategic moves: Controlled price increases (15% since 2019 vs. 30-40% for peers), shifted to whole-bird sourcing to reduce cost volatility, and boosted ad spend via franchisee contributions.

• Future goals: Reach 6,000 U.S. stores and transition to 100% digital ordering for better customer experience and higher checks.

• Fast Food Value Menus (Published August 2024)

• Chains like McDonald’s, Wendy’s, and Taco Bell reintroduced $5 value meals to counter customer backlash against high prices (up 27% since 2019).

• Fast food costs rose 40% since 2019, leading to declining same-store sales (e.g., McDonald’s -0.7%, KFC -5% in Q2 2024).

• Value meals aim to boost traffic but strain franchisee profits due to low margins; franchisees pushed back but saw incremental sales.

• McDonald’s extended its $5 menu beyond the initial one-month plan, signaling a shift to permanent value offerings like Wendy’s “4 for $4” or Taco Bell’s Cravings Box.

• Competitive “value menu war” aims to regain market share, but long-term success depends on resonating with cost-conscious consumers.