My feeds say the Restaurant Recession is already here

[rcjordan]

McDonald's earnings are a warning about the economy
https://qz.com/mcd-hog-syy-msft-may-1-1851778636

^{The big downturn in tourism isn't helping.}

[ergophobe]

Usually I feel like I see this before it becomes headlines, but so far not. Here's a screenshot of the two most important lines from AirDNA aggregate data for our county.

This shows April 25 pace for April - September in terms of revenue and, what I consider the most important number, revPAR (revenue per available room)*

We'll see what the next report yield though.

*revPAR can be pushed down by a bad economy or a good one if, for example, a boom encourages investors to open six new hotels, as happened about 6 years ago, which increases the denominator massively and quickly, but it indicates the overall viability of businesses.

The related metric that is used a lot in the hotel industry is ADR - average daily rate - but you can have a very high ADR by charging a lot of money and going empty most nights.

So, say you have one room and you book it for $1000/night for 10 nights per year, your ADR is $1000, but your revPAR is only $27.

[rcjordan]

"Despite a strong start to the year, traffic at U.S. quick service restaurants (QSR), which has been steadily declining month by month, was down 1.7% year-over-year compared to last April, signaling growing consumer caution or shifts in dining behaviors, according to Revenue Management Solutions (RMS), a company that analyzes data and provides insights about the restaurant industry.

At the same time, RMS found on average, fast food prices increased in April by +2.0% year-over-year, steady with inflation trends."

Fast food declining: April traffic, McDonald's, Chipotle Q1 sales slump - Fast Company

https://www.fastcompany.com/91332877/fast-food-restaurants-still-declining-april-foot-traffic-down-mcdonalds-chipotle-q1-earnings-sales-slump

[Brad]

Our McDonald's has a bunch of special deals that help bring the price down, but even if you take advantage of that it's still expensive.   Wendy's even more expensive.

[rcjordan]

Again from my feeds;

Over the last 12-15 months there has been a big push in the media about how bad ultra-processed foods are health-wise.  RFK has also frequently advocated for eliminating ultra-processed foods so he's on board.  Six weeks ago, there was an article headline that specifically listed pizza, burgers, and soft drinks as ultra-processed.

Do you think that's having an effect?

Debbie: Naaahh! They'd have to be dying at the drive-thru before they'd listen about UP foods.

[Brad]

It could work as a generational change if you start indoctrinating kids all through school years. 

Thinking about it, it might have had an effect on the popularity of chicken sandwiches but I think a lot of that is about price.  And other factors could be at play, I've had several people tell me the quality of fast food beef has gone down, which matches what I think.

And also shrinkage: I can't prove it but I swear a McD's Sausage McMuffin w/egg is smaller than it was when introduced, what, 40 years ago.

[ergophobe]

>> burgers

Maybe Big Macs, but burgers are one of the less processed foods people eat.

>> shrinkage

https://en.wikipedia.org/wiki/Shrinkflation
https://www.reddit.com/r/shrinkflation/

[rcjordan]

I suspect all of the high-volume, fast-food burgers are.

"And what almost certainly is UPF?

Top offenders in category four, ultra-processed foods, include fizzy drinks; packaged snacks; sweets and chocolate; ice-cream; biscuits, cakes and pastries; sausages and burgers; packaged pies and pizzas; and chicken nuggets.
Pix caption: Bad news ... ice-cream is almost sure to be UPF.

But surely no one thinks these are health foods?

True. But the UPF category also includes most bread; breakfast cereal and cereal bars; flavoured yoghurts; fruit drinks; milk drinks; "diet" products; and baby food. Van Tulleken estimates that more than 95% of supermarket bread – including healthy-sounding multiseed loaves or sourdough – is made by the industrial "Chorleywood method", which has a short proving time and a cocktail of additives and "processing aids". Even virtuous muesli often contains barley malt extract, a flavour enhancer."

Ultra-processed foods: the 19 things everyone needs to know | Food | The Guardian
https://www.theguardian.com/food/2023/sep/06/ultra-processed-foods-the-19-things-everyone-needs-to-know