A key question for the fast food industry is how well it can handle the prospect of rising costs. So far, investors have little reason to be uncomfortable.
A shortage of workers, coupled with stubbornly high unemployment claims, is a significant problem facing the U.S. economy as it emerges from the pandemic. This seems to spell trouble for the hamburger, pizza and chicken chains, which are in an industry characterized by high number of transactions and low profit margins. Food inflation is also on the rise.
The second quarter results, however, suggest that customers will still show up despite the low headcount. McDonald’s reported that comparable sales in the United States were up nearly 15% from the quarter of 2019. KFC’s parent company, Yum Brands, said the chain had increased comparable sales by 19% during the period. same period.
Even restaurants supposed to benefit from the foreclosure conditions are thriving in the reopening. Domino’s Pizza said second-quarter sales were up 3.5% year-over-year in the United States, when most restaurants were closed due to public health orders.
As a result, earnings were exceptional: McDonald’s earned $ 2.95 per share in the second quarter, up more than 40% from the same period in 2019. Other competitors posted equally strong results.