Chain Restaurant Same Store Sales “Pops”: MCD, DPZ, YUM (Pizza Hut)We recently looked for same store sales (SSS) “pops”, where the sales metric trend moved by 10% (1000 bpts) or more, from quarter to quarter. And even in the last year or two, there have been a few instances, as seen below: (SSS %s)We see today’s MCD impressive same store sales gains (but not a “pop”) that can be traced back to new products (smoothies), discounting (drinks) and sales platforms. And we are watching Dominos, that got a legitimate sales pop from its new pizza (and a nice follow-on, but not an “pop” in Quarter Two), and Pizza Hut got a 17% pop for its $10/any/any price focus (and a decent 8.0% follow on last quarter).So we see both price and new products doing the trick. But price has to be done is such way that it doesn’t destroy the average check (SONC a good example).Company FY-08 Q1, 09 Q2, 09 Q3, 09 Q1, 09 Q1, 10 Q2, 10Steak N Shake -4.1 -1.4 2.4 5.0 4.1 14.4 5.1Domino’s -4.9 -1.0 -.7 0 1.4 14.3 8.8 (US)Pizza Hut (US) 2.0 -3.0 -8.0 -13.0 -12.0 5.0 8.0KFC (US) -4.0 -7.0 3.0 -2.0 -8.0 -4.0 -7.0In addition, we believe Subway same store sales, while not publicly traded or disclosed, moved from -.1% in 2006 to 1.0% in 2007 and 12.5% in 2008. This was concurrent to the $5 footlong offer. Subway is pulling back on the offer a bit, recently.What happened? Concurrent with the pops were Steak N Shake (not promoting much heretofor) ran $.49 anniversary specials and $.89 specials. Dominos introduced its new pizza, Pizza Hut rolled out its $10/any/any campaign and KFC rolled its Grilled Chicken platform. The 2009 KFC pop was very short-lived and is now negative, SNS is moderating, and the two pizza operators are very hot.We wish we could see profitability. YUM doesn’t reveal brand profits, and the SNS/Biglari numbers are too highly summarized, and doesn’t do earnings calls. We should caution that sales gains do not necessarily equal profit gains, especially for franchisees.No one in the casual dining space moved the trend this magnitude, including Applebee’s much copied 2 for $20 mantra and Chili’s new menu (still working its way in). In fact, you can’t see any pop in their numbers. Of course, we all know the casual dining results could have been worse without it.
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