Fast-food giants Restaurant Brands International, owner of Burger King, and Yum Brands, which operates KFC and Pizza Hut, missed market expectations this quarter as consumer spending on quick-service meals dipped. Both companies attributed the decline to higher food costs and intensified value-meal promotions, as inflation continues to strain U.S. consumer budgets. Rising prices have prompted many Americans to cut back on eating out, opting instead for home-cooked meals.
To counteract the spending shift, major chains, including Burger King, McDonald’s, and Wendy’s, have introduced $5 value meals to attract budget-conscious diners. Despite these efforts, sales at Burger King fell 0.4% in the U.S. for the quarter ending September 30, while KFC’s same-store sales dropped 5%, marking a third consecutive quarter of declines.
Challenges extended internationally, with sales slowing in markets like China, where economic recovery has been sluggish, and the Middle East, where regional tensions have impacted demand. Yum Brands reported a 2% drop in global same-store sales, while Restaurant Brands’ international segment growth slowed to 1.8%, down from 7.7% last year.
Market reactions to the earnings miss were mixed; Restaurant Brands’ shares fell 3% in early trading, while Yum saw a slight increase of about 1%.