Analyst: Fast-food sales won't rise until unemployment falls

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June 09, 2010

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Several fast-food chains may have to wait until more young men find jobs before seeing same-store sales rise, according to a restaurant analyst.

Jefferies &Co. restaurant securities analyst Jeff Farmer said in a note to investors this week that an analysis of ten years of quarterly same-store sales trends and unemployment data shows that same-store sales for three chains – Jack in the Box, Sonic and Burger King – are the most highly correlated with the unemployment rate. The chain sales dip as unemployment rises, he said.

Farmer also noted that same-store sales at one company – Domino’s Pizza Inc. – actually appear to improve as the unemployment rate rises.

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Highlighted Company

Jack in the Box
Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants, one of the largest hamburger chains in the United States, with more than 2,200 restaurants in 18 states.
Burger King
The BURGER KING® system operates more than 11,100 restaurants in all 50 US States and in more than 65 countries worldwide. Approximately 90 percent of their restaurants are owned and operated by independent franchisees
McDonalds Corporation
McDonald's is the leading global foodservice retailer with more than 34,000 local restaurants serving nearly 69 million people in more than 118 countries each day.
Wendys Arbys Group Inc.
Wendy’s/Arby’s Group, Inc. - in existence from 2008 - 2011 - was at the time the third largest quick service restaurant company in the United States and was comprised of the Wendy’s® and Arby’s® brands, two companies distinguished by traditions of quality food and service.
KFC
KFC has more than 18,000 restaurants in 115 countries across the globe. And in quite a few U.S. cities, KFC is teaming up with sister restaurants, A&W, All-American Food™, Long John Silver's, Taco Bell and Pizza Hut, selling products from the popular chains in one convenient location.
Yum! Brands Inc.
Yum! Brands, Inc. (YUM) is a quick service restaurant company based on number of system units, with approximately 37,000 units in more than 120 countries and territories. The company operates the restaurant concepts of KFC, Pizza Hut and Taco Bell.
Sonic Drive-in
SONIC®, America's Drive-In (NASDAQ: SONC) is the nation's largest chain of drive-in restaurants. SONIC started as a hamburger and root beer stand in 1953 in Shawnee, Okla., called Top Hat Drive-In, and then changed its name to SONIC in 1959.

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