In light of our travels around California during the 4th of July week, the current events in California, and our recent insights on convenience stores  and weight loss drugs  hurting visits to limited-service restaurants (LSR), we turned the “Advan spotlight” on burger-QSR in California. As shown in the following chart, the category’s trend remains soft for June and Q2. The downshift for Burger King and McDonald’s in the 2H of June largely reflects difficult comparisons to last summer when they re-launched the $5 Value Meal. In-N-Out’s slowdown is simply an absolute slowdown. The improvement for the smaller chains & independents reflects an easier comparison as they lost market share when those $5 Value promotions first hit last year. The overall decreases (save In-N-Out) reflect the headwinds of limited discretionary spending, share-of-stomach lost to gas & convenience, prepared meals at grocery, more at-home cooking, and fewer calories eaten due to weight loss drugs.

Is immigration policy having an impact on the above? To help answer, we looked at traffic to the largest Hispanic grocers in California – Northgate Gonzalez Markets, Vallarta Supermarkets, El Super, and Cardenas Markets. The chart below is missing the holiday period due to the shift in Thanksgiving and early January due to the fires in Los Angeles. As shown, the recent trend is similar to the pre-election trend. As such, it appears that policy is having little to no impact on these grocery brands; therefore, we believe that it is also having no impact on burger-QSR. We are aware of Constellation Brands’ (Corona, Modelo, Pacifico, etc.) business results and commentary about the Hispanic consumer – “Our own omnibus survey research to assess consumer sentiment – … over 80% of the surveyed Hispanic and non-Hispanic consumers expressed concerns about the socioeconomic environment in the U.S. and more than 70% are specifically concerned about their personal finances. These concerns are impacting social occasions and shopping behaviors with respondents placing gatherings with friends and family in public spaces, gatherings with friends and family at homes, and shopping in convenience stores or gas stations are the top three activities they are doing less of in the last 3 months.” And so, there is some impact from policy; however, it largely doesn’t appear to be impacting one’s own food consumption, at-home or away-from-home. However, it is dampening celebrations per Constellation. Whoppers, Big Macs, 4X4s, and Big Angus-Big Carls are not “celebrations” in our opinion. (Others will of course, have a different view on that.)