McDonald’s, Chipotle advise of weak initial quarter

In like a lion, out like a lamb.

That’s just how dining establishment execs picture 2025 after a harsh beginning to the year, mainly brought on by freezing temperature levels, wildfires and customer care.

Many dining establishment chains, like Restaurant Brands’ Burger King and Popeyes, stated sales enhanced in the 4th quarter as worth offerings restored restaurants that had actually been preparing in the house rather. Even McDonald’s residential website traffic expanded, regardless of a 1.4% decrease in united state same-store sales.

But the pattern turned around in January.

“We’ve started the year facing some overall industry traffic headwinds, exacerbated by significant weather events across the country,” Wendy’s CFO Kenneth Cook stated on the business’s teleconference on Thursday.

Fast- food internet sales climbed 3.4% in January, compared to the year-ago duration, yet the development was down somewhat from December’s spike of 4.9%, according to dining establishment marketing research companyRevenue Management Solutions Traffic for morning meal and lunch both decreased throughout the month.

“I think consumers are still wary,” Subway UNITED STATE President Doug Fry informed. “I think they’re waiting to see how the economy goes, but they’re also not willing to sacrifice that quality and portion size and the quantity of what they’re eating. They want to find that best value for the dollar they spend.”

Traffic and sales development are anticipated to grab as the year advances, partially because of the very easy contrasts to in 2015’s decreases. Industry website traffic was unfavorable monthly other than November, and sales moved over the summertime, which is usually a peak for dining establishments.

“We expect year-over-year comparisons to ease into the summer months,” Restaurant Brands CFO Sami Siddiqui stated.

January constantly brings chillier temperature levels, yet this year it likewise consisted of wildfires in Los Angeles and brand-new unpredictability after President Donald Trump’s commencement.

Chipotle Mexican Grill estimates that the wildfires hurt its January same-store traffic growth by 400 basis points, or 4%.

Overall, traffic to Chipotle restaurants open at least a year fell 2% in January compared with a year ago, hurt by the weather and New Year’s Day falling on a Wednesday. Chipotle CFO Adam Rymer told analysts that the company believes its first-quarter same-store sales will be roughly flat.

Looking to the second quarter, Chipotle also expects weaker same-store sales as it faces comparisons to last year’s popular promotions. While the company predicts stronger sales in the second half of the year, its weak forecast for the coming months led to a 4% decline in the stock.

For now, restaurants aren’t predicting any major impact on their businesses from the Trump administration’s trade war. Chipotle, which imports roughly half of its avocado supply from Mexico, downplayed concerns about how currently suspended tariffs of 25% would raise food costs. The company, along with Wendy’s and McDonald’s, did not include any impact from the new 10% duties on China and potential levies on Mexico and Canada in its outlook.

But consumers are worrying about tariffs and the potential pressure on their wallets.

U.S. consumer sentiment hit a seven-month low in February as households fear rising prices over the next year. Already, inflation in January was hotter than expected, with away-from-home food prices rising 3.4% over the last 12 months, according to the Department of Labor.

For the chains plotting a comeback, sales are expected to improve later this year.

For example, McDonald’s is still waiting for its sales to rebound fully after an E. coli outbreak linked to its Quarter Pounder burgers began weighing on sales in mid-October. The fast-food giant is predicting that demand will recover by the beginning of the second quarter, McDonald’s CEO Chris Kempczinski said on the company’s conference call on Monday.

Plus, if overall consumer health strengthens, McDonald’s predicts even more sales gains.

“Should the underlying environment improve beyond our initial expectations, especially with respect to lower-income consumers, we would expect to benefit disproportionately relative to our competitors,” McDonald’s CFO Ian Borden said.

Then there’s Starbucks, which will need a much longer timeline to turn around its business. The coffee chain’s same-store sales have fallen for four straight quarters as consumers opt to buy their caffeinated drinks elsewhere.

Starbucks suspended its outlook for fiscal 2025, so it didn’t provide any insight into its expected sales for the year. However, Starbucks CFO Rachel Ruggeri told investors that the company’s earnings are expected to improve in the second half of its fiscal year.

“[Earnings per share] is expected to be the lowest in [the fiscal second quarter] on an absolute basis due to seasonality, the organization restructuring I just spoke about and elevated investments, with year-over-year pressure also intensifying in the quarter,” she said in late January. “EPS is then expected to improve in the latter half of the fiscal year 2025, both sequentially and year-over-year.”