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It’s not a great time for fast-food companies, unless you’re Taco Bell

Taco Bell is keeping Yum! Brands afloat and (so far) it’s winning the fast-food value war.

11/5/24 11:09AM

America’s inflation comfort food is, apparently, Taco Bell.

The chain restaurant is known for its Mexican-inspired cheap eats and items that sound like they were made in a test lab for stoners, like its giant Cheez-It tostada. It’s also the only restaurant in the Yum! Brands portfolio that is actually growing.

Taco Bell’s siblings, KFC and Pizza Hut, each saw same-stores sales decline of 4%, according to a Yum! Brands quarterly filing released Tuesday. Taco Bell’s same-store sales, meanwhile, were up 4%.

Taco Bell represents 75% of Yum! Brands profits, CEO David Gibbs told investors on Tuesday. The company as a whole missed Wall Street estimates, but investors still sent its stock rising about 2%.

Taco Bell’s success comes at a tough time for fast-food brands. Many of them raised prices over the past couple years until they hit a ceiling where customers no longer recognized them as the cheap meal they once knew. If they’re going to pay $15 for a meal, they’re going to go to the more premium chains like WingStop or Chipotle.

This summer, restaurants started rolling out value meals aimed at fixing their relationship with customers. McDonald’s introduced its $5 meal deal and its CEO, Joe Erlinger, declared to Bloomberg News in June that he is “committed to winning the value war.”

But so far, Taco Bell is wining that war. It’s the only one of its top fast-food competitors that reported same-store sales growth: Wendy’s and Burger King were virtually flat, and McDonald’s was down 1.5% as of the end of September.

Gibbs said Taco Bell’s advantage is that it “can provide a product that is a value product, that’s an innovative product, and that can help our franchisees’ margins.” In other words, you might go to Taco Bell to try the new Cheez-It tostada or because you only have $5.

“We’re very confident in Taco Bell’s ability to win in this environment relative to our peers," Gibbs said.

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American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

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The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

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Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

Three US airlines have already hiked baggage fees. More are likely on the way.