Restaurant chains are predicting better results this year. Here’s why investors should think twice about trusting them
It was the difficult start to the year for the restaurant chains. People return to consumption due to uncertain economic conditions, and restaurants cannot simply rely on the price increase to increase their top lines more. The last quarter of 2024 has already shown signs of weakness, and things could be worse in the coming months. This can ultimately depend on how the tariffs affect customers and businesses.
Some major restaurant chains including McDonald’s (Nyse: McD) and Chipotle Mexican barbecue (Nyse: cmg)They expect stronger numbers as the year goes by. But that is by no means a sure thing. Here’s why they could go wrong and why investors might want to cautiously carefully carefully watch shopping restaurant supplies right now.
For investors, a large number to be careful about when it comes to restaurant supplies not necessarily sales but Comparable sales growthwhich tells you how organically the job has grown. The comparable image excludes the effect of new openings and zippers, so it provides more apple -to -apple comparisons.
And that’s a problem. For the last three months of 2024, McDonald’s comparable store sales increased by only 0.4% globally. In the US they were lowered 1.4%. Chipotle, which is smaller in size but known for being the top stock growthHe reported on a comparable sales growth of 5.4% during the same time frame. It’s better than McDonald’s, but a year ago that growth rate was 8.4%.
Despite the data, both McDonald’s and Chipotle expect things to improve as the year is progressing. Ian Borden, the McDonald Main Financial Director, says the company expects “a gradual stabilization of the macroeconomic and consumer environment”. Chipotle also expects things to improve in the second half, when it will increase against weaker comparable numbers compared to the previous year. No company seems to be struggling to slow the economic.
No one wants to predict the worst, but the reality is that trade wars and exacerbated economic conditions can have a devastating effect on both sales and restaurants profit. Although these chains can offer discounts on customers, another alternative may include a simple dish at home.
Costco wholesale He recently reported his earnings, and noticed a change in consumer habits – they spend more on food at home, which can include things such as repacked food products and frozen meals. The administration sees people simply more careful in what they spend their money to.
