Yahoo Finance McDonald's Big Macs and Chipotle burritos are in, $20 sit-down steak dinners are not
Having fast-food delivered to your house via Uber Eats or ordered and then picked up on the way home from work seems to be en vogue right now.
And that could spell further bad news ahead for $20 sit-down steak dinner sellers in the casual dining industry. Dine Brands (DIN), operator of the Applebee’s and IHOP chains, posted second quarter earnings of $1.71 a share on Wednesday. Wall Street analysts were looking for $1.81 a share.
Dine Brands pinned the surprising earnings miss mostly on its Applebee’s chain. Applebee’s same-store sales fell 0.5% in the quarter amid weak traffic to its restaurants. At the core of the traffic shortfall, Dine Brands said — competitive discounting in the casual dining industry.
Applebee’s — which had been on the comeback trail under new management — now sees its same-store sales unchanged to rising 1.5% this year. Previously, the brand had expected 2% to 4% same-store sales growth.
“Competition is pretty fierce — we have got to drive more value,” Dine Brands CEO Stephen Joyce tells Yahoo Finance.
IHOP also lost momentum at the hands of tepid traffic. Management lowered its full-year same-store sales outlook on the pancake house by one percentage point.
Dine Brands slashed its full year earnings guidance to $6.80 to $6.90 a share from $6.90 to $7.05 previously.
Dine Brands stock fell Wednesday more than 3% on the news.
The scene wasn’t much greater at Applebee’s competitor Bloomin’ Brands (BLMN) during the second quarter.
While the Outback Steakhouse operator touted its reiterated full-year financial guidance and better than industry average sales growth, the Outback business’s 1.3% same-store sales result was slower than the 3.5% from the first quarter. Meanwhile, Carrabba’s Italian Grill saw same-store sales dive 1.6% and at Bonefish Grill same-store sales rose a mere 0.1%.
Again, Bloomin’ Brands is known as a sit-down restaurant operator.
McDonald’s and Chipotle feed off of mobile
Suffice it to say, the cheaper to dine at fast-food industry crushed it during the second quarter. From McDonald’s (MCD) to Starbucks (SBUX) to Chipotle (CMG), some of the industry’s biggest names are benefiting from fresh mobile ordering pushes, a bevy of menu innovations and attractive deals.
Chipotle notched an insane 10% same-store sales increase in the second quarter, gains that haven’t been seen since the chain’s heydays five years ago. The result was fueled mostly by growth in the number of transactions. Analysts had projected an 8.4% increase in same-store sales.
The burrito chain’s CEO Brian Niccol told Yahoo Finance that a combination of better operations, new mobile ordering, better marketing and better tasting food has helped Chipotle regain customers. And one can surmise, keep them out of Applebee’s and Outback Steakhouse.
Over at the digitally minded Starbucks, U.S. same-store sales spiked 7% in the quarter as it felt an influx of new traffic into its stores. Starbucks CEO Kevin Johnson sung the same notes as Niccol in an interview with Yahoo Finance, calling out new iced coffees and a revamped ordering app for its standout quarter.
And last but not least is the beast that is the Golden Arches.
McDonald’s U.S. same-store sales spiked 5.7% on the back of momentum behind delivery via Uber Eats, menu innovation and bundle deals.
Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi
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