The plan of fast food brands

The plan of fast food brands

Big fast-food brands are planning for post-pandemic growth.

Chipotle Mexican Grill, Taco Bell owner Yum! Brands, and Domino’s Pizza are among several big names aiming for post-pandemic expansion, according to their CEOs, as per a report by Reuters.

The trend is being driven as prime storefront locations are left empty amid the recession, leading to cheaper, more flexible rents, and greater real estate opportunities.

David Deno, chief executive officer of Outback Steakhouse parent company Bloomin’ Brands, admitted as much, telling Reuters: “I don’t mean to wish ill on anybody, but there’s going to be real estate opportunities,” for new stores or relocations to areas with “better visibility, better access and better parking.”

The dent in the real estate market is significant. According to research by Citigroup, retail properties collected less rent than other real estate sectors in April. Malls collected only 28% of rents and shopping centers 60%, among other commercial property declines, they found.

“Brands that are doing well in this environment should have an opportunity to expand their footprint,” David Gibbs, chief executive officer of Yum!, which owns Pizza Hut, KFC, and Taco Bell, among other restaurant chains, said in an earnings call late last month. “There’s no reason to think that this brand… is not going to be a growth business long term. And unit development is a big part of that.”

The Reuters report states that major restaurant chains stand to gain as much as 10-15% of market share in the next few years, utilizing their long held advantages of convenience and accessibility.

The shake-up of the post-pandemic restaurant market should come as no surprise. Many chains likewise expanded at the close of the global financial crisis

Not that it will be all plain sailing given the nature of the current crisis. Sales of major chains plunged in late March and April, leading many corporations to drop their initial financial forecasts and cancel construction projects.

Nevertheless, the general mood is one of positivity. The CEOs of Shake Shack, Wendy’s, Papa John’s International, and Yum China Holdings all expressed post-coronavirus expansion during recent earnings calls.

“If there’s opportunities that make sense for us on the real estate side, we will pursue those,” said David Hoffmann, Dunkin’ Brands Group CEO during an April 30 call. “But you also want to balance being a good corporate citizen and sticking to your values, and not being a shark either.”

2020-05-28T17:36:07+00:00

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Paul Imison
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