US fast food chains: Truist data points to Q2 sales pressure despite value promotion

Wingstop

09/07/2024 14:46

** Truist Securities based on card data tracking says setup
into Q2 earnings for McDonald's  MCD.N , Burger King and Wendy's
 WEN.O  appears negative owing to culmination of outsized menu
price increases since 2019
    ** Recent launches of $5 value meals from Restaurant
Brands-owned  QSR.TO  Burger King and MCD to offset weaker sales
"does not appear to be shifting momentum" - Brokerage
    ** Notes MCD same-store sales declined in May and June, from
flat growth in April, with last week of June "the weakest in the
quarter" despite launch of its '$5 Meal Deal' 
    ** Truist cuts PT on MCD to $300 from $320; slashes PT on
QSR to $87 from $90, retains "buy" rating on both stocks
    ** Says Texas Roadhouse  TXRH.O  and Wingstop  WING.O 
potential earnings outliers in qtr, as Y/Y sales growth remained
solid in May, continuing into June
    ** Adds consumers are finding TXRH and fast casual
restaurants worth for money through experience, quality and
value
    ** Analyst Jake Bartlett says fast food operators may shift
away from deep value promotions to (affordable) menu innovation
to boost sales, which would be a positive for the industry
overall
    ** Truist Card Data tracks spending at the restaurants for 6
mln-7 mln U.S. consumers, with a regional skew to the Southeast
    ** YTD, MCD stock down 16.4%, QSR fell 10.4%, WEN declined
~19%, underperforming broader S&P 500 index  .SPX  which is up
16.8%

 (Reporting by Savyata Mishra in Bengaluru)
 ((Savyata.Mishra@thomsonreuters.com))