The US war on Iran is frying fast food sales.
Restaurant industry sales have fallen every week in March as the Iran war sent gas prices surging across the country, pressuring consumers’ disposable income.
“The war in Iran is likely having negative effects on both restaurant demand and on supply, with rising operating costs (energy, commodities), partial closures and limited supply chain especially in Asia,” Bernstein restaurant analyst Danilo Gargiulo said in a note on Friday. “On the demand side, the high-frequency data from early March appears to be showing industry slowdown, and we think it is reasonable to interpret that as incremental pressure on a low-income consumer who was already stretched and spends on gas disproportionately more as % of income.”
Since the start of Operation Epic Fury in late February, US gas prices have undergone their most violent upward swing in decades.
The national average, which was a relatively stable $2.98 per gallon before the conflict with Iran, surged past the $3.90 mark by late March. The 32% increase represents the largest spike since Hurricane Katrina in 2005.
This pump shock has been driven primarily by the near-total closure of the Strait of Hormuz, which has knocked approximately 20% of global oil supply offline and sent crude oil prices screaming past $100 per barrel.
Read more: How oil price shocks ripple through your wallet, from gas to groceries
Many of the major fast food stocks have subsequently gone ice-cold.
Starbucks (SBUX) and McDonald’s (MCD) are both down about 7% in the past month. Wendy’s (WEN) is off by 10%, and Chipotle (CMG) has tanked 15%.
The lone outperformer has been Burger King and Tim Horton’s parent company Restaurant Brands (QSR), with shares up 5%. The stock price gain likely reflects a recent viral marketing campaign for the revamped Whopper.
“The silver lining is that there is no rising anti-American sentiment that could impact 2Q,” Gargiulo said, pointing to conversations he had with execs at McDonald’s and Restaurant Brands.
Gargiulo added, “We came away with a consistent message from both companies that so far there is no anti-American sentiment caused by the war in Iran, which is an important distinction versus the pressures that many restaurants faced in 2023-24 in the Middle East (~5% of McDonald’s stores) and in many developed countries in April 2024, post ‘Liberation Day.'”
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.