The chips are down: pizza, fried chicken and doughnut shares plunge on ASX as living costs bite budgets
Summary
Shares of major fast food companies on the Australian stock exchange have dropped sharply as living costs rise and consumers cut back on spending. High fuel prices, inflation, and interest rate hikes are squeezing household budgets, which is reducing demand for fast food, a usually affordable option.Key Facts
- Shares of Domino’s Pizza, Collins Foods (KFC operator), Retail Food Group, and Guzman y Gomez have fallen significantly in recent months.
- Rising oil prices linked to the US-Israel-Iran conflict have increased costs for businesses and consumers.
- Fast food is considered a discretionary purchase, meaning people can easily stop buying it if money is tight.
- Consumer confidence in Australia has dropped to levels not seen since the early pandemic.
- Inflation rose to 4.6% in the year to March, causing prices of many goods and services to increase.
- High fuel prices and interest rate rises have made living more expensive for many Australians.
- Fast food stocks are usually strong during downturns because people trade down from restaurants, but this time that defense might be weaker.
- Drive-through sales are impacted as fewer people are willing to spend on takeaway with added fuel costs.
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