With Gen Y’s $2.5 trillion in purchasing power focused more on fitness and less on fatty goodness, times have been tough for the likes of McDonald’s, Wendy’s and other fast-food joints. Taco Bell and KFC parent company Yum! Brands recently reported a disappointing set of third quarter earnings, while McDonald’s sales have been under such pressure that, earlier in the year, the Golden Arches company said that it would stop releasing its monthly sales reports. But according to one Wall Street analyst, the road ahead for these companies isn’t entirely bleak – and in fact, there could even be bright spots thanks to initiatives like all day breakfast and mobile ordering.
In a “Dining Disruptors” note released Wednesday, Citi analyst Gregory Badishkanian takes a deep look at the fast-food industry and the hottest issues affecting dining giants like McDonald’s and its burger brethren. Among his conclusions: breakfast is good, labor concerns remain, and restaurant operators can’t get over-zealous when it comes to price increases.
Let’s start with the breakfast argument.
