Key insights
- Rising energy prices due to the Iran conflict are negatively impacting restaurant demand and supply chains. Bernstein notes pressure on low-income consumers and franchisee margins, potentially slowing store renovations and digital expansion. While McDonald's hedging provides short-term protection, sustained high energy prices could shift the burden to franchisees. The situation is particularly disruptive in Asia, with spotty supply chains and increased logistics costs.
Investing.com -- Fast-food giants McDonald’s Corporation (NYSE:MCD) and Restaurant Brands International Inc (NYSE:QSR) are navigating a complex operating environment as the ongoing war in Iran begins to weigh on global demand and supply chains.
According to a new research note from Bernstein, management at both firms has signaled that while direct U.S. supply chain impacts remain limited for now, the broader macroeconomic fallout is increasingly visible.
Rising energy and commodity costs are expected to tighten franchisee margins, while high-frequency data from early March suggests a cooling in consumer spending.
The conflict is placing incremental pressure on low-income consumers who were already facing financial headwinds. Analysts note that this demographic spends a disproportionately high percentage of their income on fuel, meaning that the recent surge in gas prices acts as a direct tax on discretionary food-away-from-home spending.
Both McDonald’s and RBI have historically been viewed as "defensive" plays during downturns. Still, the severity of the current energy shock is testing the floor of value-oriented restaurant demand, particularly in international markets where partial closures and limited supply chains are already surfacing.
On the supply side, McDonald’s has leveraged its robust hedging programs for both energy and commodities to shield corporate-owned stores and franchisees from immediate volatility. However, Bernstein warns that if energy prices remain elevated through the second half of 2026, the hedges would eventually roll over at higher market rates.
The burden on franchisee profitability would shift, potentially slowing down store renovations and digital expansion plans if the "middle of the P&L" continues to compress.
The geopolitical situation has been particularly disruptive in Asia, where both companies report "spotty" supply chains and increased logistics costs. For Restaurant Brands International, the parent company of Burger King, Popeyes, and Tim Hortons, the challenge lies in maintaining consistent value messaging while local operators grapple with rising overhead.
Despite the ongoing pressures, analysts remain focused on the long-term unit growth potential of both chains, though they caution that near-term earnings reports may reflect a "cautious" tone regarding global comparable store sales.