“Society is fast — fast food, fast cars, fast everything.” — B. J. Armstrong
Chart of the Day
Good morning!
Back in my day, $5 was all you needed to get a good meal. It was the year 2024, when value wars took off to lure hungry but money-conscious customers like me.
But that magical price point is increasingly turning into $6, showing the pressure chains are under to pursue loss-leaning value strategies to improve sales without sacrificing too much on already thin margins.
Carl Jr.’s in May unveiled a sandwich with fries or onion rings and chicken stars for $5.99 as long as you order past 8 p.m. The burger chain is promoting the deal via influencer Alix Earle and racy ads. Popeyes in recent weeks has pushed for a big box for $6 containing three tenders, two sides, one biscuit, and one sauce. Dunkin’ Donuts since February has had a $6 meal deal that gets you a bacon, egg, and cheese sandwich, hashbrowns, and a medium coffee. None of those, however, match the $6 margarita at Applebee’s, which has been around since March.
Chains started ramping up deals and promotions last year, with many of them coming out with $5 meal options to tempt inflation-weary consumers into spending. The number conveyed affordability, even though taxes would bring the total higher. While that seems like a smart business idea on the surface, most fast-food places soon abandoned it because it didn’t translate into profit.
But now tariffs and economic uncertainty are weighing on consumer spending again. Many have turned to kids meals to save money. That’s why chains are looking to get back in the value game—only this time with a new price tag of $6 and up.
Though early, it seems like foot traffic data indicates $6 hasn’t turned away consumers just yet. Visitors to fast-food and other quick-service restaurants last quarter fell less than full-service restaurants.
Any meaningful pullback would threaten to upend gains in chain shares, which have trounced this year’s rout in the consumer-discretionary sector many of them belong to and the broader market.
Restaurant Brands International, parent of Burger King, Tim Hortons, and Popeyes, has added 2.7% this year, McDonald’s has gained 8.4%, and Yum! Brands, which owns Taco Bell, KFC, and Pizza Hut, has increased 8.5%. Meanwhile, the consumer-discretionary sector is down 6.93%, while the S&P 500 is down 0.7%. (Many chains don’t trade publicly.)
But there are worries about how much longer the rally can last.
Consumers don’t feel good about the economy. The University of Michigan’s consumer sentiment index fell in May for a fifth consecutive month to its second lowest reading on record.
Prices for food eaten away from home remain elevated, rising 3.9% in April from a year ago, according to the Labor Department. Overall inflation rose 2.3% over the same period.
Restaurants, too, are struggling with higher costs. To cover them, a report from the National Restaurant Association says that the average restaurant would need to increase prices 23.8%. However, that would only mean breaking even, with no profitability. Of course, fast-food companies operate with higher margins than restaurants, but they still face similar pressures.
To be sure, the biggest player in the fast-food industry—McDonald’s—is still sticking with its $5 meal option because it can get Coca-Cola to subsidize costs associated with the promotion. Burger King, too, has a $5 meal at select locations.
And casual dining chains like Applebee’s and Buffalo Wild Wings are going big by offering all-you-can-eat options for either tenders, shrimp, or riblets and wings with fries for $15.99 and up.
When the $6 meal becomes the $7 meal is anyone’s guess.
Share your thoughts
Tell us your favorite fast-food order. Click here to send us your response.
📧✍️Here’s what a reader commented📧✍️
Question: Is Nvidia’s NVLink Fusion a good idea for the company, or will it ultimately be detrimental?
Answer: I think Jensen Huang is one of the most incredible individuals of our time. He inspires everyone, continues to evolve, and is simply remarkable. We are all in on Jensen Huang.
Catch up with FS Insight
This is the second consecutive week that things feel normal without controversial headlines or social media posts. Investors remain too cautious, in our view, and this remains the fuel for upside in stocks, or more specifically, this keeps pullbacks shallow.
Technical
Overall, I remain encouraged about the technical progress and structural improvement that has occurred in SPX over the last six weeks, and feel that an upcoming move back to challenge February peaks should be forthcoming.
Crypto
At the macro level, renewed concerns about fiscal deficits and bond market stress reinforce the longer-term thesis for BTC as a hedge.
News We’re Following
Breaking News
- Trump plans to impose 50% tariff on EU imports from next month FT
Markets and economy
- Bond Market to Washington: We’ll Make You Pay WSJ
- JPMorgan’s Jamie Dimon to ‘deepen engagement’ with China FT
- SCOTUS signals Fed chair may be safe from firings SEM
Business
- What the Era of ‘Sovereign AI’ Means for Chip Makers WSJ
- Alphabet’s stock is charging even higher. Here’s how Google’s AI bets are resonating. MW
- Apple Stock Falls After Trump Threatens Tariffs on Foreign-Made iPhones BR
Politics
- Trump’s ‘Big, Beautiful Bill’ Heads to Senate, Where New Fights Loom WSJ
- Trump’s Memecoin Gala Dinner Draws Crypto Tycoons, a Basketball Star and Protests WSJ
- Trump administration bars Harvard from enrolling international students FT
Overseas
- India corners Maoist rebels after decades-long struggle FT
- Ukraine and Russia begin biggest prisoner swap of the war FT
Of Interest
- An Ode to the Penny, Departing After 233 Years of Service WSJ
- Mocktails Cost $15 and Nobody Knows Why WSJ
- The great Syrian gold hunt FT
- ‘Mission: Impossible — The Final Reckoning’ Review: Tom Cruise Defies All NYT
| Overnight |
| S&P Futures -4
point(s) (-0.1%
) Overnight range: -15 to +15 point(s) |
| APAC |
| Nikkei +0.47%
Topix +0.68% China SHCOMP -0.94% Hang Seng +0.24% Korea -0.06% Singapore +0.06% Australia +0.15% India +1.01% Taiwan -0.09% |
| Europe |
| Stoxx 50 -0.19%
Stoxx 600 +0.01% FTSE 100 +0.13% DAX +0.16% CAC 40 -0.38% Italy -0.33% IBEX -0.06% |
| FX |
| Dollar Index (DXY) -0.6%
to 99.36 EUR/USD +0.62% to 1.1351 GBP/USD +0.59% to 1.3498 USD/JPY -0.55% to 143.22 USD/CNY -0.33% to 7.1816 USD/CNH -0.4% to 7.1756 USD/CHF -0.39% to 0.8258 USD/CAD -0.35% to 1.3808 AUD/USD +0.78% to 0.6461 |
| Crypto |
| BTC +0.18%
to 111289.08 ETH +1.66% to 2685.34 XRP +1.15% to 2.4502 Cardano +2.92% to 0.8238 Solana +4.67% to 186.88 Avalanche +2.59% to 25.91 Dogecoin +3.46% to 0.2482 Chainlink +1.97% to 17.0 |
| Commodities and Others |
| VIX +0.49%
to 20.38 WTI Crude -0.26% to 61.04 Brent Crude -0.26% to 64.27 Nat Gas +1.35% to 3.3 RBOB Gas -0.07% to 2.13 Heating Oil -0.44% to 2.108 Gold +1.06% to 3329.28 Silver +0.23% to 33.13 Copper +1.19% to 4.704 |
| US Treasuries |
| 1M -0.4bps
to 4.257% 3M -2.3bps to 4.3118% 6M -2.0bps to 4.2742% 12M -6.1bps to 4.0576% 2Y -0.7bps to 3.9826% 5Y -0.9bps to 4.0847% 7Y -0.8bps to 4.2917% 10Y -1.2bps to 4.517% 20Y -1.8bps to 5.0335% 30Y -1.8bps to 5.0216% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 4.4bps to -40.7
bps 10Y-2 Y Spread narrowed 0.2bps to 53.2 bps 30Y-10 Y Spread narrowed 0.6bps to 50.3 bps |
| Yesterday's Recap |
| SPX -0.04%
SPX Eq Wt -0.32% NASDAQ 100 +0.15% NASDAQ Comp +0.28% Russell Midcap -0.14% R2k -0.05% R1k Value -0.36% R1k Growth +0.27% R2k Value -0.16% R2k Growth +0.05% FANG+ +0.54% Semis -0.27% Software +0.53% Biotech -0.1% Regional Banks flat SPX GICS1 Sorted: Cons Disc +0.56% Comm Srvcs +0.32% Tech +0.12% Indu -0.0% SPX -0.04% Materials -0.07% Fin -0.12% Cons Staples -0.41% REITs -0.41% Energy -0.44% Healthcare -0.76% Utes -1.41% |
| USD HY OaS |
| All Sectors +2.6bp
to 377bp All Sectors ex-Energy +2.9bp to 339bp Cons Disc +2.2bp to 370bp Indu +1.3bp to 285bp Tech +0.9bp to 343bp Comm Srvcs +2.5bp to 539bp Materials +4.0bp to 354bp Energy +1.4bp to 428bp Fin Snr +4.0bp to 312bp Fin Sub +5.1bp to 284bp Cons Staples +2.0bp to 267bp Healthcare +4.2bp to 379bp Utes +2.3bp to 255bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 5/23 | 10AM | Apr New Home Sales | 695.0 | 724.0 |
| 5/23 | 10AM | Apr New Home Sales m/m | -4.0 | 7.4 |
| 5/27 | 8:30AM | Apr P Durable Gds Orders | -8.2 | 7.5 |
| 5/27 | 10AM | May Conf Board Sentiment | 87.0 | 86.0 |
| 5/28 | 2PM | May 7 FOMC Minutes | n/a | 0.0 |
| 5/29 | 8:30AM | 1Q S GDP QoQ | -0.3 | -0.3 |
