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Feb 26, 2024

How 5 fast food chains are seeing late

Wendy’s, Jack in the Box, McDonald’s, Burger King and Taco Bell saw visits rise from Q1 to Q2, Placer.ai data finds. The late-night daypart is becoming a bigger revenue driver for major fast food

Wendy’s, Jack in the Box, McDonald’s, Burger King and Taco Bell saw visits rise from Q1 to Q2, Placer.ai data finds.

The late-night daypart is becoming a bigger revenue driver for major fast food chains. During second-quarter earnings calls, QSRs discussed how late-night traffic is growing, sparking new promotion opportunities and even new store models.

At Jack in the Box, increased staffing helped the chain successfully promote its Munchie Meals combo box, which are popular during the late-night day part, with Snoop Dogg.

Placer.ai data confirms that late-night traffic has been growing, said R.J. Hottovy, head of analytical research at Placer.ai, in an email to Restaurant Dive. Taco Bell, Jack in the Box, Wendy’s and McDonald’s all saw significant jumps in their late-night hours in the second quarter compared to the first quarter of this year, Hottovy added.

“There are some seasonal factors at play — QSR chains tend to have greater last night visits during the summer months — but a number of chains are also spending more on their late night advertising, expanding hours of operation, and entering into partnerships with delivery services,” Hottovy said.

Check out how five of the biggest fast food chains’ traffic stacked up during Q2’s late-night hours.

Yum Brands has seen success with its late-night daypart, especially at Taco Bell where late-night sales buoyed the brand’s sales in the second-quarter.

“An expansion of trading hours with strong growth at both the breakfast and late-night dayparts helped Taco Bell's second quarter results,” David Gibbs, Yum Brands’ CEO, said on the company’s most recent earnings call.

The shift toward late-night consumption is significant enough to factor into Taco Bell’s store design, according to Scott Mezvinsky, Taco Bell’s managing director for North America.

Mezvinsky said in an interview that the brand’s digital and delivery orders in the late-night daypart have necessitated changes to design. When dining rooms have closed for the night, diners collecting their meals at the drive-thru have led to increased ticket times and difficulty. In response, Taco Bell has developed an updated version of its Go Mobile unit design that fits on a half-acre lot and has a walk-up window dedicated to digital and delivery orders, diverting them from the drive-thru lane.

Wendy’s late-night daypart has helped the chain’s digital sales, with double-digit growth in the daypart compared to the previous quarter. Ninety percent of the chain’s restaurants are open until midnight.

“We're seeing higher average checks, and a skew toward delivery, which further supports the restaurant economic model,” Todd Penegor, Wendy’s CEO, said on its most recent earnings call.

“We continue to see room to grow our share of this daypart versus our QSR competitors and are excited to continue advertising late-night,” Penegor said. As customers try Wendy’s late-night offering, Penegor expects them to come to see Wendy’s as a reliable option, leading to repeat visits, and become part of customers’ routines.

“It is highly incremental, it's business that we don't have today, it's a strong category that's been growing consistently for the last couple of years,” Penegor said. “We can continue to drive sales without adding any labor.”

Wendy’s ability to increase sales without a requisite increase in staffing is its greatest opportunity for margin growth, Penegor said. Delivery is a key element to that late-night sales improvements, with its share growing in recent quarters.

“We saw a nice uptick on delivery with the late night having those restaurants open a little bit later, there's a preponderance of consumers liking delivery at that late-night daypart,” Penegor said.

Jack in the Box’s same-store sales rose 7.9% during Q2, largely due to continued staffing and operating hour improvement, particularly during late night, CEO Darrin Harris said during an August earnings call. This allowed the chain to have additional flexibility with promotions, which came in hand with its partnership with Snoop Dogg to help celebrate the 10th anniversary of Jack’s original Munchie Meal.

From June 28 to July 2, Jack in the Box rebranded a Los Angeles-area restaurant as Dogg in the Box to promote its custom Snoop Munchie Meal.

“The promotion had some important signals related to our business and investor story,” Harris said. “First, that our restaurants are in much better shape related to staffing and hours, and to the point where a national late-night activation such as this was even possible. Second, it helped those within our system that had yet to reopen late night to do so in a more rapid fashion. And lastly, it enhanced our belief that Jack can truly own late night.”

Late night also helped Jack’s third-party delivery channel, which had a 12% increase in sales contribution year-over-year, Harris said.

“All day parts generated positive sales year-over-year. But once again, the late-night day parts stood out the most, with late night now posting positive transactions year-over-year for the third straight quarter,” Harris said.

McDonald’s executives did not discuss late-night traffic on the company’s Q2 2023 earnings call.

RBI executives did not discuss late-night traffic on the company’s Q2 2023 earnings call.