The restaurant sector is being watched closely by investors to see if consumers are showing signs of cracking amid high menu pricing.
Quick-service restaurant sales increased 1.8% in August on a year-over-year basis, according to a new report from Revenue Management Solutions.
Traffic was down 1.2% during the month compared to a year ago when traffic was off 1.1%. Average price increased 1.4% during August and quantity per transaction rose 0.4%, which combined led to a 1.8% increase in the average check during the month.
By order type, delivery was the top-performing fast-food sales channel, up +13.8%. Takeout traffic stayed high, up +11.6%. However, dine-in continued its downward trend at -1.1%, and drive-thru traffic declined by -5.9%.
Analysts think restaurant chains could face additional traffic pressure in the U.S. in the near future after the nation’s largest chain turned more promotional.
Earlier in the month, McDonald’s (NYSE:MCD) confirmed that it is bringing back its Extra Value Meals. The fast-food chain said the return of Extra Value Meals ensures customers can find everyday affordable pricing on McDonald’s (NYSE:MCD) menu boards across the country for breakfast, lunch, and dinner. The Extra Value Meals include deals on Sausage McMuffin with Egg, Sausage Egg & Cheese McGriddles, Egg McMuffin, Bacon, Egg and Cheese Biscuit, Big Mac, 10-piece Chicken McNuggets, any variety of the Quarter Pounder burger, and any variety of the McCrispy Sandwich. The breakfast meals come with hash browns and coffee, while the lunch and dinner meals include fries and a drink.
The value menu focus could impact other fast-food chains such as Burger King (QSR), Wendy’s (WEN), Taco Bell (YUM), Jack in the Box (JACK), Sonic, Whataburger, Culver’s, Five Guys, Hardee’s, Carl’s Jr., Checkers, and Shake Shack (SHAK).