Life in the fast (food) lane: Fast food companies are picking up market steam

Legacy fast food companies are killing it as the minimum wage slowly increases.


July 31, 2019

As humans lean more health conscious these days, snack brands and high-preservative grocery store goodies — like peanut butter — have struggled.

On the flip, the past couple of years have, surprisingly, proved to be cash cows for fast food chains.

According to Goldman analysts, OG drive-thru brands like McDonald’s and Taco Bell — and pricey fast-casual ‘straunts like Chipotle and Shake Shack — have helped the fast food industry outperform the S&P by 27% over the last 12 months.

Chipotle’s stock is on track to hit $1k per share, and Mickey D’s has seen its stock break records 18 times this year alone.

So what’s the deal?

Some of the credit is due to fast food companies investing in digital engagement — but there’s also another (more interesting) factor at play.

The fast-food industry’s surprising boost primarily comes from the increased pay of low-wage workers.

That’s right, we have ourselves another wacky economic indicator

Goldman’s research team estimates 70% of the industry’s growth over the past 5 years can be linked to rising wages and flourishing third-party apps like Uber Eats.

You would think rising wages would hurt the “cheap-food” industry (don’t hate, Panda Express is choice) but, as gas prices stay steady, the rising paychecks of minimum-wage workers is leading to more cash dropped at the drive-thru.

Daily briefings, straight to your inbox

Business and tech news in 5 minutes or less

Join over 1 million people who read The Hustle

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.