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Finger Lickin’ Competition: Analyzing Quick Service Restaurants’ Pandemic Revenue Trends

Friday, October 22, 2021 • 9:30 AM EST

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As consumers sought accessible dining options during lockdowns in 2020, quick service players like RBI (Tim Hortons, Burger King, & Popeyes) and Yum Brands (KFC, Pizza Hut, Taco Bell, & The Habit) saw revenue growth. To better understand the drivers of this revenue growth, Cardify analyzed volumetric results for RBI’s portfolio of quick service restaurants (“QSR”) compared to Yum Brands’ portfolio. Diving deeper on specific brands, Cardify contrasted chicken contenders Popeyes (RBI) and KFC (Yum Brands). 

In terms of revenue, 2020 and 2021 year-to-date have both been strong for RBI and Yum Brands. With the exception of a significant drop in March 2020 during the initial phase of lockdowns, the two companies experienced higher indexed revenue during the remainder of 2020 up until August 2021.

Revenue growth aside, both families of brands experienced a reduction in traffic during the pandemic. On an indexed level, both held fairly steady from May to October 2020, spiked a bit during early 2021, but have since fallen to below January 2020 levels.

Average order value, on the other hand, increased and remained high for the entirety of the pandemic. This suggests that QSR patrons began to spend more on fast food almost immediately, shifting dollars away from dine-in restaurants that were unavailable due to closures - temporary or permanent.

The chicken wars: Popeyes vs. KFC

Demand for chicken fast-food dishes is at an all time high, with both RBI and Yum Brands placing big bets on their respective chains (Popeyes & KFC). To better understand these two dueling chicken behemoths, Cardify analyzed revenue, transaction counts, and average order value specifically for Popeyes and KFC. Cardify then investigated customer behavior to further decompose their results. 

KFC is the winner over Popeyes when comparing relative performance during the pandemic. The company experienced larger spikes in revenue and sustained milder lows than Popeyes from January 2020 until now. 

The same trend emerges for traffic to the chains. While Popeyes and KFC displayed similar trends from July 2020 to March 2021, KFC had higher spikes both before and after that time period. KFC has also sustained its most recent bump in traffic better than Popeyes. That said, both restaurants averaged fewer transactions throughout 2020 and 2021 than they had in January 2020.

Both restaurants earned higher average order values, reflecting the trend of their respective parent company. KFC eked out a marginally higher relative peak than Popeyes and sustained that increase throughout 2020 and 2021.

A shopper perspective

To double-click into the macro findings, Cardify investigated customer behavior across the two chicken chains. In particular, Cardify sought to understand why KFC displayed stronger volumetric growth during the pandemic.

Starting with customer penetration (the proportion of chicken consumers who are purchasing the target brand), Popeyes boasts a higher absolute share of shoppers (35%) than KFC (33%). However, compared to last year’s performance, Popeyes’ shopper penetration has declined by 9% while KFC’s has fallen only 1%. Although Popeyes’ was the more popular chain at the beginning of the pandemic, KFC retained its cohort of customers more effectively. 

Evaluating average spend per customer, Popeyes’ absolute figure also exceeds KFC’s ($58 vs. $52). Again, the insight emerges when comparing relative performance. Popeyes’ average spend per customer increased 3% compared to last year, driven by a 9% increase in spend per trip. KFC exceeds this result with a 11% increase in spend per customer, led by a 15% increase in spend per trip. In practical terms, this signifies that KFC is doing a better job at growing average order size to make up for fewer visits to the restaurant. Perhaps the availability of larger menu items (e.g., KFC’s double-bucket meals) has played a contributing role. 

Considering the totality of the shopper value equation, it’s evident that while RBI’s Popeyes began the pandemic as the star performer, Yum Brand’s KFC is picking up momentum to turn the tide.

A quick service pandemic

Data shows people spent more than usual at quick service restaurants. This could have been due to additional concerns and following COVID-19 public health protocols even as dine-in restaurants were allowed to re-open across the country. 

What remains to be seen is how long the quick service revenue bump will last. RBI is already seeing drops to below January 2020 revenue, while Yum Brands is still comfortably above their January 2020 numbers. However, the world is also changing rapidly: vaccination rates continue to climb steadily, unvaccinated people (who have represented a higher amount of entertainment spending during the fourth wave) are finding themselves shut out of restaurants due to COVID vaccination requirements, and new treatments for COVID are coming to market that might further accelerate economic recovery. 
As the current pace continues, people might stand by their new old favorites or return to dine-in restaurants and spend their money on other forms of leisure, food, and entertainment. Only time will tell.