The Effects of Winter Blasts End, Eventually
While we were lucky in December, the usual winter blast had the expected result. Sales fell off the cliff in the second half of January and into February, with the first week of February an ice/snow disaster. On a nationwide basis, sales were down about 8% for the 2 week period, with traffic down even more. The blast was about a week late, with the third week of January typically gets hit. This decline was steeper than the long term normalized weather models at minus 3-4% with ice snow conditions. [1]
At the ICR Conference in January and the Q4 earnings calls to date February 6, every brand presented some mix of guest, revenue, expense, CAPEX and liquidity initiatives. We saw some very quality items and will remain “cautiously optimistic”[2] Time will tell of course. A small group of brands continue to do well, but then one sees clumps at around zero, minus 2-3% and then a block of publics such as YUM components, KFC US (moderately down) and Pizza Hut US (solidly down) at minus 5 to minus 10% same store sales. [3]
Cracker Barrel (CBRL) continues to be the most recent significant fallen brand; McDonald’s (MCD) powered out of its doldrums to MSD positive . There are two casual dining HOLDCOs, Darden (DRI) and Texas Roadhouse group (TXRH) doing very well.
New News
Wholesale food commodity inflation moderated to minus .6% in 2025, an improvement from 2022-2025. Even with this, significant problems remain in beef supply and rancher prices. Expectations are that the beef market will continue to inflate until late 2026. Expected 2026 inflation is plus 3%. That is about the 30 year norm. However, pricing actions are very high risk. I recommend operators look to LTOs and menu display reconfiguration. See NRA at https://lnkd.in/eRy47Q2U.
Chipotle Note: Is it an older brand or newer brand?
The discussion on Chipotle has been intense. Chipotle has been on a tear until 2024. It was gaining stores and market share as far back as 2004. Its IPO was in 2006. Chipotle has had several operational bumps along the road. It recovered from two runs of restaurant transmitted illness to a number of guests that was well publicized. There also was the under portioning publicity. Also, the Cava brand is a major competitive threat to Chipotle with their growth.
Chipotle’s reiterated target units to be opened for 2026, is 330 to 380. That represents about 9% unit growth planned in 2026. I still believe that is too many new units for a recovering brand under stress.
The notion that new brands do well is generally seen by looking at recent same store sales by cohort. But the opposite can be true as well. Franchising also makes a difference . See Table One and Two for recent date on SSS growth by brand. I will run some statistical data and will publish it here.
Table One: Top Five Brand Gainers, Dec 2025-Janury 2026
Here, all five brands are expanding units and 4 of 5 are company owned. Only one is an “old brand,” and none has achieved national penetration yet.
Table Two, Top Five SSS Decliners, Dec 2025-January 2026
None of these are “new” brands, although Panera started expanding in the early 1990s. Hardee’s, Sonic and Del Taco are older and almost 100% franchised now.
Beware Of The Toxic Employee
None of us wants to discount every day, all the time. That means that we have to stand out via service. Mr. Mac Brand, an organizational and training expert in our industry, has outlined a meaningful tactic to set the example and improve our people conditions. See below.
Cohesive teams have several characteristics in common. In the restaurant business, few things matter as much as the talent, skill, and focus of the customer-facing team to engage with your customers to deliver the desired brand experience. (And a sustainable revenue stream).
Collaboration is fundamentally critical for a successful shift. It’s the bartenders, the waitstaff, the kitchen crew, the shift manager, and the dishwashers all working together. They all must get along and be respectful to each other, while staying focused. Unfortunately, one bad apple on a shift can make it painful for everyone else. In short, they make everyone around them miserable while setting the wrong example for everyone. It’s rarely a one-time occurrence.
If you have toxic team members, they need to go, and the sooner the better. Coaching them up is not an option for someone who is fundamentally unkind; they cannot be allowed to stay. If they can’t or won’t play nice on their own, what’s the point? They’re unlikely to be “fixable” by one of your managers, and that’s not their job. Worse, the other, talented, committed team members will be asking themselves, “Why is this person allowed to stay here?”
We’ve all had the painful experience of finally noticing these behaviors after an issue with a customer or another team member. By then, oftentimes, the damage has already started. There may be a legal or HR problem in the short term, but the damage to the restaurant's morale and culture is far worse.
About the author: John A. Gordon MAFF has over 40 years’ experience in restaurant financial planning and analysis, brand reviews and special investigations, including M&A and expert litigation topics. Call him anytime: mobile/text, 619 379 5561, email jgordon@pacificmanagementconsultinggroup.com
[1] Hat tip: Deutsche Bank, Lauren Siberman.
[2] The watchword coming out of the conferences.
[3] Hat tip: Jeff Farmer, Gordon Haskett,
