MENU PRICE INCREASES MAKE 2Q COMPS LOOK GOOD
Comps must be interpreted through a prism of mid to high single digit menu price increases, suggesting QSR traffic losses while FSR benefits from an ongoing return to normal dine-in habits. In any case, substantial menu price increases are driving trade-down among lower-income consumers to value offers while also pushing marginal FSR customers towards QSR.
While it remains to be seen how all the moving parts will play out over time, assuming food costs remain at current elevated levels, RR’s consumer survey (which measures intentions to eat-out over the next month) reveals a challenging 3Q sales outlook.
Fortunately, the restaurant industry is keeping price increases below the grocery stores for now.