There is logic in thinking a company like Collins Food should do well when there are cost-of-living pressures.

QSR cheaper than traditional restaurants

However, I saw a tweet the other day about some American complaining about the price of fast food - the Five Guys if I remember correctly. His meal cost something like $21 for a burger/fries/drink.

That made me think that possibly people are tightening their food budgets to the point where they eating more at home than they have in the past because home-mdae meals are by far the cheapest option

PLUS

This could be a erroneous assumption on my part: the older generations, who are being affected less by cost-of-living pressure, tend to eat less at QSR restaurants while those more likely to go to KFC or McDonalds are the younger generations, some of whom are under signifcant financial stress right now.

@juneauquan Poor QSR results have been a worldwide phenomenon. i can only think of CMG doing well. besides the usual fried chicken v burgers v pizza comparative value leapfrogging, the main issue is that costs, mainly commodity but also wages (low-wage workers getting inflation-related raises) are crunching margins. it only takes the marginal consumer to change to make a difference on the sales side, that is a couple of % change their habits, eg eat at home, or move to another QSR format. these trends have been in place for about two years now, IMO they are the tail end of the inflation issues we have seen and ultimately will pass.

This idea has been thrown around for years and makes some sense on the surface.

But dig a little deeper and (like most things in this life) its a little more nuanced.

Bit of a shock here

Still find there are lots of people queueing up at KFC where I am in Chatswood

I would hazard the problem is shrinking basket size and less upselling. The margin at KFC comes from the fries and drinks not the chicken, at Dominoes it's all the frankenfood sides and at Chargrill Charlie's the salads etc. People still turn up for their chicken – the foundation of these fast food businesses is "craveability" after all – they just don't get the bells and whistles. Toss in a bit of cost inflation and CKF has a rough year or so.

I don't think the trade down from restaurants to fast food/QSR theory actually exists in the real world. Most people will just stay home.

@UlladullaDave I agree, the theory really doesn't seem to have played out.