Key Points:
- Observed traffic for the limited-service industry was just a touch stronger QoQ. Fears around cyclosporiasis appears to have affected industry-wide traffic slightly. The 4th’s timing was a bigger pothole.
- Taco Bell’s CQ2 quarter was solid, July has been traumatic. The outbreak and fears may have had some impact on Chipotle and Chick-fil-A, but that’s a soft impact. (Let us know if you want to see other brands.) By contrast, McDonald’s appears to have been viewed by consumers as a safer alternative, resulting in stronger traffic.
For Taco Bell, we see the following:
- Observed traffic for Q2 was similar to Q1’s pace, as was the increase in observed ticket. (All of this note’s figures are adjusted for growth in the number of locations.)
- Of note, July 4th was on Saturday this year vs. Friday last year. The timing creates a “pothole’ in the industry’s traffic early in the month. (Saturday is approximately 10% larger than Friday).
- Taco Bell’s June traffic strengthened due to effective LTOs.
- For the quarter, Taco Bell outperformed the limited-service industry.
- Fears around cyclosporiasis have driven traffic down hard. Our prior report here.
For Chipotle, we see the following:
- Observed traffic for Q2 was similar to Q1’s pace (observed +1.7% vs. reported +0.6%); observed ticket grew at a faster pace (+1.7%) Thus, Q2’s comp-sales increase should be stronger QoQ.
- The high volatility in traffic is somewhat surprising. Weather and gas prices?
- Post the cyclosporiasis outbreak, traffic has softened vs. LS, but it's still outperforming.
For Chick-fil-A, we see the following:
- Observed traffic for Q2 was -130bps less than Q1’s pace; the observed ticket was similar QoQ. And so, it looks like the adverse weather and higher gas prices were greater drags on Chick-fil-A’s performance.
- The 4th of July’s timing impact was very large on traffic.
- Traffic appears to have been impacted by cyclosporiasis fears, until recently.
For McDonald’s, we see the following:
- Observed traffic for Q2 was similar to Q1’s pace, as was the increase in ticket. (We understand that there are other data providers saying that the quarter was much slower.) A slowdown is logical given the move in gas prices, which put the Q2 comp less than Q1’s +3.9%, but we see no evidence of that in our data.
- McDonald’s traffic outperformed the limited-service industry by a greater margin QoQ (+33bps).
- The Super Mario promotion boosted traffic in March
- The new Refreshor line-up boosted May.
- In July, McDonald’s gained share from others as it was viewed as a safer alternative.
