’Tis the season for all our favorite publicly owned companies to release their second quarter earnings reports, and this might very well be the most dramatic Q2 in the history of the restaurant industry. The highs! The lows! The very, very, very lows! Folks, we’re about to get bombarded with some very depressing headlines about the state of the restaurant industry. But let’s do our best to read the entire article before we collectively shove our heads into the sand, because, as always, there’s a tremendous amount of data that can’t be squeezed into every doomsday headline.
Take, for example, the headline “Dunkin’ is closing 800 locations,” which has been popping up all over the news today. That figure is accurate, though not necessarily apocalyptic; 800 locations accounts for 8% of Dunkin’ outlets. It’s a startling and concerning piece of news, but there’s a bigger picture: those 800 locations account for only 2% of the company’s sales, and over half the locations closing are located within Speedway convenience stores, and the company had announced plans to shutter those locations all the way back in February. So if you run on Dunkin’, you probably won’t have to stop doing that in the near future. Save your energy worrying about the slightly more distant future, because the rest of Dunkin’s Q2 report is, predictably, a hot mess.
Similarly, the Restaurant Business headline “McDonald’s is closing another 200 locations” seems a bit scary, though a bit less so when you consider that Mickey D’s has nearly 14,000 restaurants in America alone, over 38,000 internationally, and probably several thousand in the afterlife, too, because even mortal death cannot destroy a soul’s need for McNuggets. In the article itself, Restaurant Business reports that over half of the closures are low-volume kiosks located inside of Walmarts, since McDonald’s is looking to move away from situating restaurants inside malls or other enclosed retail areas where having a drive-thru is impossible. The coronavirus caveat: the closures were intended to happen gradually over the next few years, but in this week’s earnings call, McDonald’s CFO Kevin Ozan said that the company will be accelerating all planned closures in order to focus on the future.
“The number of drive-thrus impacts the market’s pace of recovery,” Ozan said. “Markets with a higher percentage of drive-thrus are showing quicker recovery. Markets with a higher concentration of city center and mall restaurants are seeing a heavier impact from reduced foot traffic.”
McDonald’s declined to offer any forecast for its future performance, because who the hell knows what Q3 might look like? Even though McDonald’s is doing rather well recovering from the most batshit financial quarter in nearly a century, who can say with confidence that the coming months won’t bring swarms of locusts that feast on Big Macs, or that Grimace won’t be roped into some sort of dark web crime syndicate?