Higher Gas Prices Have Yet to Siphon Off Fast-Food Sales

With the war with Iran now in its third month, investors and analysts have watching to see whether consumers – particularly lower-income families – will cut back on their spending at restaurants. But so far, at least, that hasn’t happened at several major fast-food operators, reports The New York Times.

Global sales at U.S. McDonald’s restaurants that have been open at least a year rose 3.9% in the quarter that ended in March, compared with the same period last year, the company today (May 7).  Similarly, Yum! Brand Inc.’s Taco Bell and Restaurant Brands Intl.’s Burger King showed strong sales in the first quarter of the year, suggesting that higher fuel costs did not cause customers to pull back their spending on dining out, the Times reported.

But many restaurant chains also warned that continued higher fuel costs — as well as soaring beef prices — could squeeze profits and dampen consumer spending, especially among lower-income households. To help combat that, McDonald’s and other chains have been offering value meals to pull consumers through their doors, the newspaper noted. In April, the Chicago-based fast-food giant expanded its value options with a new menu of items priced under $3 and a new $4 breakfast deal.

“Obviously, based on what we know today, I think we certainly think there’s potentially inflation on the way,” toward the end of this year and into the beginning of next year, McDonald’s CFO Ian Borden said on the company’s call with analysts about its most recent results.