Biggest takeaways from restaurant chain earnings

Yahoo Finance food reporter Brooke DiPalma joins Yahoo Finance Live to discuss recent earnings reports from several restaurant chains, including Yum! Brands, Starbucks, and Chipotle.

Video Transcript

- The big takeaway from this sector so far this earnings season. What do you think that is?

BROOKE DIPALMA: Yeah, well we saw McDonald's, we saw Shake Shack, we just saw so many companies give us an inside look at the state of the US consumer, and ultimately, the health, the willingness of them to spend. And ultimately, just pushing aside those higher prices. And so taking a closer look, we saw US same-store sales growth across the board here.

Some of the standouts include Wingstop, up 20.1% year-over-year entirely driven by transaction growth the company said. McDonald's up 12.6% boosted by higher prices and more customer traffic in their locations as well as on their digital apps. In addition to Starbucks, up 12% driven by an uptick in transactions as well as an increase in average ticket size.

And Chipotle, largely boosted by those higher menu prices. They were one of the fast casual chains and one of the restaurant spaces that took the highest. Increase in menu prices up about a range of 10%. And so largely higher prices, but customers undeterred.

So I would say my top takeaways here-- consumer remains resilient. Analysts in the street continue to use that word resiliency among the US consumer. In addition to that, a combination of higher traffic as well as higher prices led to that same sales growth. And at the end of the day, Shawna, labor availability has improved. Retention also has improved.

Randy Garutti, Shake Shack CEO, saying that because there's less turnover, they're actually able to gain sales. And they're doing faster through but they're able to increase their sales momentum there. And so ultimately labor improvements a big win that we've been waiting to see really post pandemic here.

- Billions of consumers. That's probably why we have seen so many of these companies move aggressively on price hikes. Are we expecting a little more caution this year if we look to the latter half?

BROOKE DIPALMA: Yeah, well, that was sort of the emphasis. It's only the first quarter. And so a lot of these executives are starting to wait and see what exactly happens. But Starbucks CFO telling us earlier this week that she expects them to go back to more normalized, historical levels of pricing. That's about 1% to 2%, Akiko. But if you take a look at some other brands, for example, Yum Brands CEO shared a similar tone. And here's what David Gibbs CEO, once again, of Yum Brands told Yahoo Finance earlier this week.

DAVID GIBBS: I do not anticipate taking it as much price in 2023 as we did in 2022 simply because inflation has abated for us in terms of our key input costs on the food side and even the labor market has gotten a lot better. We now have more applications, more team members and stores, better staffed stores.

BROOKE DIPALMA: And in addition to that, we also saw Chipotle, as Akiko noted before, really waiting and seeing what's happening. Putting forward that cautious tone. They said that they don't have any plans to increase prices right now as they just wait and see what food inflation, what labor inflation comes towards the rest of 2023. But really across the board, what we saw this past earnings season is that the customer is willing to spend here in the US. And not only are they going to these fast food stores, but they're also spending perhaps a little more while seeking value at other places.