Fast Food Sales Rebound; Yum Brands Eyes Health Care Costs

 

As I noted last week, the restaurant industry’s outlook for 2010 appears to be a bit mixed. According to a recent article in Forbes, however, it seems the change in seasons is contributing to growing sales within the fast food market. A number of fast food chains, including Taco Bell and Hardee’s, are expected to report an increase in business during this early spring, including mega-parent company Yum! Brands, owner of Pizza Hut, Taco Bell, and KFC, who will be delivering their first quarter sales numbers this week.

Industry analyst Gregory R. Badishkanian credits the growth to an improvement in employment and consumer confidence, as well as a “pent-up demand for dining out” after dreary winter months. Domino’s Pizza, who reinvented their pizza products based on customer feedback as part of their “Oh Yes We Did” campaign, reported an increase in sales across the board, including a nearly 90% increase in stock price since the campaign’s launch in December.

With the passing of the new health care bill, restaurants are looking to a number of changes in business over the next few years. From menu labeling to increased health care costs, many are examining what’s in store for the future.

Yum! Brands Inc., the world’s largest outlet restaurant company, looks to see a staggering increase in health care costs for it’s company-owned locations. According to the Dallas News, Yum, who owns more than 37,000 restaurants in over 110 countries and territories, will have a $30 million annual health care bill once the legislation is implemented in 2014. To offset some of the costs, the company has plans to sell a number of its locations to franchisees who would have to foot their individual location bills.

~Jennifer Heigl