Burger King generated its sales growth with operations. | Photo: Shutterstock.
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Earnings season was at its most intense last week—thank God that’s over—and there was a clear lesson in the numbers: Those restaurants focusing on in-store operations did quite well.
For this exercise, we will simply look at the burger business. Burger King generated 5.8% same-store sales growth in the first quarter. McDonald’s did 3.9%.Wendy’s reported a decline of 7.8%.
It’s worth pointing out that McDonald’s 3.9% requires a lot more sales than Burger King’s 5.8%. But Burger King’s 5.8% came without the level of discount marketing that McDonald’s used to get its sales last quarter.
The brand spent years working on in-store operations, which is not easy to do in a franchise. Its customer service scores according to Technomic have soared. And then the brand marketed the hell out of it. Customers responded.
Wendy’s, meanwhile, has some operations and store quality challenges. While it is working with operators on fixing up their restaurants and their service, and made a strong argument in favor of that on Friday, it is still in the very early innings of that effort.
We can run down a list of brands on fix-it plans that are focused on operations and that had good results last quarter, notably Starbucks, where same-store sales were up 7.1%.
The lesson here: Run good restaurants. The business is too competitive not to.
This week’s financial news
John Chidsey was good for Subway, at least when it comes to corporate profitability.
Wall Street was tough on a lot of companies’ earnings results, none more so than Shake Shack, which plunged 30% after it reported a net loss.
Speaking of which, Dutch Bros investors were not impressed by its strong quarter. Meanwhile, it is tougher to get a job at the chain’s shops than it is to get into Harvard.
Uh … Sweetgreen.
At some point, rising costs is going to interfere with the big value push. But it is not this day, at least according to McDonald’s.
Tom Curtis talked to how many people?
Fat Brands creditors are not too thrilled with the sale process.
Apparently, franchisors don’t like it when franchisees buy competing brands.
Speaking of running better restaurants, we present Noodles & Company.
Number of the week
This graph shows you how franchisors can offset declines in royalties even when stores are closing. Subway has become far more profitable under Roark. That said, it also has a lot of debt.
Quote of the week
“My wife wouldn’t let me in the house and take calls for hours on end.” -Burger King President Tom Curtis on why he talked to people from his porch on weekends.
On the blog
I wrote about Burger King, gas prices and Subway. Check out all my blog posts on The Bottom Line.
On the podcasts
I had a great conversation with Scott Drake, CEO of Chuck E. Cheese owner CEC Entertainment, for A Deeper Dive. On The Week in Restaurants we talked earnings.
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.
