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2019 Q2 Retail Index - Food

by 
Ethan Chernofsky
 on 
August 14, 2019
2019 Q2 Retail Index - Food

Both Starbucks and McDonald’s enjoyed impressive performances in Q2, with the latter’s stock hitting an all-time high after earnings. 

What sets both brands apart is a penchant for innovation. McDonalds made headlines for acquiring a technology company earlier this year and Starbucks has consistently shown a keen understanding of how to engage audiences with creative products and promotions. Speaking about the coffee leader, BTIG analyst Peter Saleh said that, “after several years of anemic traffic in the Americas, guest counts accelerated on the strength of cold beverage innovation and digital engagement.”

But was this rise a trend felt only by the giants or were there benefits to go around? We analyzed the Q2 performance of ten of the top fast food and fast-casual brands to find out. 

Cross-Sector Growth

With the warming weather came a significant increase in visits compared to Q1 for some of the top restaurant chains. Both McDonalds and Dunkin saw visit increases above 9%, while Wendy’s quarterly growth was over 12% and Sonic saw a massive 34.3% increase. Importantly, these numbers also reflect seasonality and the expansion of stores. So while Starbucks saw a ‘modest’ 1.3% traffic increase, it is an impressive feat considering the brand's primary strength is the fall and winter. Sonic's growth was a reflection of normal trends for the period, but was still a critical sign of strength for the brand.

The Value of Time Spent

Yet, the small rise for Starbucks and the dip for Panera belie one of the strongest assets these to chains possess - the ability to drive extended visit durations. While there are many visitors who pop into a local Starbucks for a coffee order before dashing off, those who do visit tend to take their time. This is indicated by a plus-50 minute average duration for those who have made a longer visit. Only Panera can boast the same among the analyzed group. This advantage is an asset worth monitoring as it speaks a to unique ability to boost sales, and could position Panera well for growth - especially with a new push into dinner.

McDonald’s Magic

Apart from experiencing tremendous growth in visits in Q2 compared to Q1, there are few elements not to love about McDonald’s relative performance. Isolating the brands that focus on savory offerings McDonalds sees an average visit that is significantly higher than the norm. The average visitor to the brand came to the location an average of 3.7 times during the quarter - not counting drive-through visits! This is a tremendous facor that speaks to the brand's strength, ongoing appeal and the diversity of offerings that can drive strong traffic across different audiences.

Conclusion

Beyond Meat isn’t the only player in food enjoying the impact of 2019, with several of the top players in restaurants enjoying an impactful Q2. Yet, there are elements that separate some of the top performers. McDonald’s didn’t just enjoy a rise in visits, but a visit rate that was matched only by Starbucks. Starbucks saw limited growth on Q1, but considering they are a brand that focuses on hot drinks, Springtime growth only demonstrates the innovation in their product line. Finally, Panera remains one of the most interesting players in food. The company has strong underlying characteristics, but a new dinner menu makes them one of the most interesting chains to watch.

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