Demand spike stuns Restaurant Brands
The head of fast-food company Restaurant Brands says demand has seen sales at some of its chains rise to levels higher than those prior to the Covid-19 pandemic.
Demand for fast food has been skyhigh since national lockdown restrictions loosened last Tuesday. This has forced a number of food operators throughout the country to shut their doors early after being eaten out of their stock.
This has been the case for a number of KFC stores, and while Finaccess Capital-owned Restaurant Brands was prepared for the spike in demand following the move to Alert level 3, some of its supply chain was not prepared, chief executive Russel Creedy said.
Due to the sheer number of transactions being made since last Tuesday, Paymark’s payment processing system crashed and was down multiple times last week.
About 80 KFC stores out of 180 are open, 100 Pizza Hut stores and 18 Carl’s Jr stores out of the company’s 310 stores. The one Taco Bell store in New Lynn is not yet open as it does not have an e-commerce platform for delivery or click and collect finalised.
Five weeks of store closures has cost the company $50 million in sales.
“Drive-thru was always a huge part of the business; circa 65 — some stores — 70 per cent . . . and then on top of that the delivery channel was preCovid [ around 5 per cent, that has ramped up] as well,” Creedy told the Herald.
“Between the drive-thru being busier and the increase in deliveries, we’re approximately where we would have been if the dining area was open as well.”
Creedy said the group was “very happy” with its sales, and that KFC had by far been the most in demand.
Sales at Carl’s Jr since the move to lockdown level 3 were up more than 30 per cent compared to revenue prior to the pandemic, he said.
“Drive-thrus at Carl’s Jr were never that busy. The drive-thru capacity is now being utilised closer to capacity which . . . is great,” said Creedy.
“The minute the lockdown was announced we went immediately into preparation mode for opening up again. The management team knew that when we opened it was going to be really open so we spent five weeks working hard from home, spending hours and hours on video conference calls planning through opening.
“We knew opening was going to be huge and it’s met our expectations.”
The lost $10m in sales per week during level 4 lockdown over five weeks was not expected to be recovered in full, Creedy said.
“We might get to half of that recovered, but the important thing is the trajectory and what happens in the second half of the year.”
Sales in Hawaii had held up well during the pandemic, led by its Pizza Hut brand, along with sales of Taco Bell. Sales in its businesses in Australia were also good and had been little affected by the outbreak, he said.
“It’s a good outcome that half of Restaurant Brands’ business, Hawaii and Australia, have managed to do as well as last year if not slightly better. In New Zealand, we’ll spend the rest of the year trying to catch up.”
The fast-food sector was resilient and tended to be little affected by disruption, this had proven time and time again, including through the
We knew opening was going to be huge and it’s met our expectations. Russel Creedy, Restaurant Brands
Christchurch earthquakes and during upheaval experienced in other parts of the world, Creedy said.
“Having businesses offshore in Australia and the US has helped us spread the risk of upheaval. The US market continues to be very buoyant and Australia really is not bad at all . . . we’re fortunate to have half the business offshore and that’s a good defensive position for the Restaurant Brands stock. It would be tough if we were only in NZ and that’s why we decided a number of years ago to spread our wings.”
Taco Bell’s second store located on
Auckland’s Shortland St will open this year.
Creedy said Restaurant Brands was not interested in acquiring the Burger King NZ business that was in receivership and looking for a new buyer.
The company had seriously looked into the possibility of owning
it a number of years ago before it was acquired by US-based private equity company Blackstone.
“Owning Carl’s Jr is competitive to Burger King, but the far more important [deciding] aspect for me was what else could I do with the capital; do I want to spend $50-60m buying Burger King NZ or do I rather go and buy a business in California that’s going to give a far better return, or just invest in Taco Bell NZ or Taco Bell Australia,” he said.
“We won’t bother putting a bid in.” Restaurant Brands received $21,813,984 in wage subsidies for its 3651 employed at its various fast-food chains in New Zealand.