Main takeaway
Although macroeconomic data improved in June, restaurant traffic remains soft. Meanwhile, Pizza Hut turns '90s nostalgia into a value play.
Consumer snapshot
- Inflation: Fell 0.4% from May to June, driven by gasoline falling 9.7% month over month (BLS)
- Sentiment: July sentiment jumped 11.5% to 55.2, a five-month high (University of Michigan)
- Drive-thru economics: Each $1 increase in the price of a gallon of gas costs a drive-thru about six customers a day (Revenue Management Solutions)
- Jobs: Labor force participation dropped to 61.5% in June as more workers stopped looking (CNBC)
Quantiiv's take: Inflation cooled in June and sentiment improved as consumers felt less pressure at the pump, a positive month in a rapidly evolving environment.
Industry news and earnings
- Industry: QSR second-quarter net sales grew 2.0% year over year while traffic declined 1.2% and average price rose 1.2% (Revenue Management Solutions)
- Chipotle: Second-quarter revenue rose 9.3%, driven by 2.2% comparable-sales growth and 1% higher transactions, while restaurant-level margin fell 220 basis points to 25.2% (Chipotle)
- Domino's: U.S. same-store sales rose 0.1%, their softest growth in over a year, as carryout increased 1.1% and delivery declined 0.7% (Domino's)
- Wingstop: Domestic same-store sales fell 7.5% on lower transaction volumes, while adjusted EBITDA rose 12.5% (PR Newswire)
Quantiiv's take: The industry is building sales momentum with positive same-store comps while margin and traffic remain soft.
This caught my eye: Pizza Hut's throwback value menu
The "newstalgia" trend is popping up everywhere, but Pizza Hut stands out because the brand is leveraging it across the full ecosystem with its "Hut Originals" campaign, rather than launching a single LTO.
Pizza Hut is leaning into its 155 iconic "Pizza Hut Classic" locations — think red roofs, checkered tablecloths, and Tiffany lamps. On June 10, it gave away a free Personal Pan Pizza to anyone who brought in a BOOK IT! button from any decade of the program.
On July 14, Pizza Hut dropped the Throwback Value Menu nationwide with $3 personal pans, $10 stuffed crust pizzas, and two new items — Triple Cheese Mac and S'mores Sticks. The launch also included a Dinner Service NY streetwear collaboration that turned old Pizza Hut uniforms into merchandise and an in-app "Back to the Hut" trivia game.
It is multi-generational by design. A parent who earned free pizza with BOOK IT! in the '90s can now buy a shirt referencing the same program while their own child earns pizza through the current BOOK IT! program. Pizza Hut is using nostalgia to target two customer generations simultaneously.
Quantiiv's take: Pizza Hut is cultivating a collection that feels like the best of the '90s and inviting customers back in. Taking prices down to reflect the world 30 years ago may backfire by bringing more attention to current-day prices. The takeaway for any brand sitting on a legacy might be to stop chasing novelty. Your back catalog could be your best product line, but you just haven't built the infrastructure to sell it yet.