Could things turn around for the fast-food sector soon? | Photo: Shutterstock.
I didn’t expect 2025 to turn out the way it has. Same-store sales were weak in the first quarter, and appear to have decelerated since then. We now have reports of closing stores, layoffs and CEO departures. Technomic has lowered its sales forecast, and it’s tough for me to see any real improvement anytime soon.
Patrick Doyle doesn’t share my pessimism. “I will tell you, I’m a little more optimistic,” the executive chairman of Burger King owner Restaurant Brands International said in an interview. “I think it’s gotten a bit better. It’s not great yet. But I think it’s getting better.”
Specifically, Doyle is seeing results out of Tim Hortons in Canada. Much like McDonald’s is in the U.S., Tims is a barometer of the country’s restaurant economy. And Tims’ sales are rolling along, thanks in part to Canadian consumer confidence.
“They were pretty concerned about tariffs three, four months ago,” Doyle said. “There’s a lot less concern now. I think you’re seeing the consumer confidence get better in Canada, so I think it’s improving.”
Still, it’s been a tough environment in the U.S. for fast-food chains, and that difficult environment interrupted the comeback of Burger King. The fast-food chain’s sales had shown real progress in 2023, after a brutal series of closures and bankruptcies of some of its largest franchisees.
Those sales stumbled at the end of last year as the environment caught up with the chain, as it did many other brands. Its sales have outpaced the fast-food sector so far this year, but that’s like being the king of a molehill.
“The last 12 months have been pretty spicy,” Doyle said. “I think some of it was self-inflicted.”
As a reminder, food and labor costs soared coming out of the pandemic, as a brutal labor shortage led to spikes in wage rates as everybody—restaurant chains, meat packers, distributors, etc.—raised prices to get people into jobs. That led to a dramatic increase in wages, which helped fuel sales for a time.
But as other costs like housing soared, too, the price increased began to look increasingly troublesome. Consumers have a long memory. They believe fast food should be cheap. Suddenly, it was a lot less cheap than they remember. And so consumers cut back and they view fast-food as too expensive.
“Everybody had been struggling to take price for so long that when it looked like you could, everybody did and the floodgates opened,” Doyle said. “Everybody took too much, and everybody’s had to figure out how to dial that back.”
Burger King had to navigate a particularly tough road. The chain before the pandemic got into the habit of heavy discounting as it worked to keep pace with surging rivals McDonald’s and Wendy’s. It frequently discounted its Whopper.
No restaurant chain should discount its premium items. If you have a discount on a premium menu item, stop doing that.
Burger King has broken free of that habit. But it now faces a consumer skeptical about prices while the sector fights a brutal value war. Doyle believes RBI’s brands have the right balance now. “I feel we’re in pretty good shape now on our brands and have gotten to where we need to be from a value perspective,” he said.
But there are indeed signs of improvement. Some chains have reported better sales over the summer. And consumers do show up for good marketing efforts. Burger King’s own How to Train Your Dragon Meal performed well in May, for instance.
It’s also worth pointing out that much of the fast-food sector has figured out that they win with marketing and with better operations and stronger franchising strategies. If there’s one big dose of good news, it is that the industry will be better at the end of this era than it was going into it. Burger King, for example, is operating better than it did a few years ago and it should have a higher-quality of franchisee, too.
And things can definitely change. The full-service sector was in brutal shape in 2024. In 2025, it can seemingly do no wrong.
As long as tariffs don’t lead to significantly higher costs—a big if—and the economy can navigate a rough road, there’s no reason the fast-food sector can’t turn things around and justify Doyle’s optimism.
