Five Guys shows how brands can thrive overseas quickly. | Photo: Shutterstock.
This is from the weekly restaurant finance newsletter The Bottom Line. To get this in your inbox every Monday morning, click here.
As many of you read this, we’ll be in Barcelona for the Global Restaurant Leadership Conference. One of the companies we’ll be talking about there is Five Guys, which you can read about here.
Five Guys, like many burger and fast-casual chains, has had its issues domestically. But it has thrived overseas. Nearly one-third of its total system sales are now generated in international markets. It is more successful at this than any other U.S.-based fast-casual brand, including the much-more celebrated Shake Shack.
It’s certainly not alone in this. A lot of struggling U.S. restaurant chains do great elsewhere. The most prominent example of this, of course, is KFC, which is a powerhouse worldwide but has struggled for literally decades stateside. Burger King is another one. Great outside the U.S. Less great inside.
That gap is increasing right now as the domestic restaurant market struggles. Most large restaurant companies did far better internationally last quarter than they did domestically.
McDonald’s same-store sales in its more mature international markets grew 4.3% and 4.7% in its growth international markets. In the U.S. they rose 2.4%. Taco Bell’s same-store sales grew 12% internationally. In the U.S. they grew 9%. Pizza Hut’s international same-store sales grew 2%, in the U.S. they declined 6%. Starbucks’ international same-store sales rose 3%. They were flat domestically. I think you get the picture by now.
To be sure, some of that is comparisons, but not all of it. The U.S. in general is a difficult market even in the best of times, with too many locations for the level of demand. While international markets certainly have plenty of competition, and are not easy, they can certainly provide growth opportunities for domestic operators if they do things right.
And, if you read the Five Guys piece, you can find that those markets will teach you a lesson or two.
This week’s financial news
So we started our podcast series on AI in Restaurants on A Deeper Dive this week. Let’s hope it finishes before Wall Street’s AI bubble bursts.
Krispy Kreme opened its first Minnesota location in 17 years last week and, as a loyal Minnesotan, I had an obligation to show up. Everybody else in the state did, too. Anyway, I tied it into renewed questions about the chain’s business model.
Everybody is saying that younger consumers are having a tough time these days, because it is absolutely true.
But Starbucks can apparently get enough of them when it sells bear-shaped reusable cold cups.
Here are some of our takeaways from the recent round of restaurant earnings.
Another casual-dining chain is using value to generate customer counts.
Papa Johns was a victim of a fake buyout report. But it was certainly believable given the number of take-private deals these days.
Share buybacks do not look great when your franchisees can’t afford to remodel locations.
Number of the week
As noted above, Five Guys has taken off internationally. Its global system sales surpassed $1 billion for the first time in 2024.
Quote of the week
“It’s thawing. It’s not thawed.” -Damon Chandik, who leads restaurant investment banking with Piper Sandler, on the IPO market at the Restaurant Finance & Development Conference this week.
On the blog
I wrote about the IPO market, younger consumer finances, share buybacks and restaurant earnings. Check out all my blog posts on The Bottom Line.
On the podcasts
On A Deeper Dive we looked at AI in restaurants. On The Week in Restaurants we talked Sweetgreen.
For questions, comments or story ideas, send me an email at jonathan.maze@informa.com. And follow me on Twitter at @jonathanmaze. And also LinkedIn. And TikTok.
