Gas prices and value wars squeeze QSRs
The thesis argued that elevated gas prices are forcing quick-service and casual dining restaurants into margin-eroding discount wars to retain lower-income consumers.
The argument
Analysts from Bank of America and Morgan Stanley noted that while chains like Domino's are launching unplanned promotions to counter a March consumer pullback, rising commodity and fuel costs mean not all competitors can afford to discount, potentially leading to increased store closures.
The thesis, stress-tested
✓ What validates it
- ✓Unplanned promotional campaigns launched in Q2
- ✓An increase in restaurant bankruptcy filings or store closures among smaller competitors
▸ Risks discussed
- ▸A rapid drop in gas prices could restore consumer discretionary spending
- ▸Larger chains may successfully take market share from weaker competitors who close down
Hear it yourself
"Hear in-depth insightful interviews with interviews with authors like Zadie Smith, musicians like Steve Earle, actors like Kate Winslet and beyond. You never know who you'll hear next on All of It, but it's always worth listening. That's All of It available wherever you get your podcasts. On the program today, a slice of pizza and a video game. What more could you possibly want? From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Risdall. It is Monday today. This one is the April 27. Good as it always is, everybody, to have you along."
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE