Fast food chains expected to experience rising prices, pivot to digital in 2023

Yahoo Finance food correspondent Brooke DiPalma looks forward to fast food industry trends expected to continue into the new year.

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- 2023 is around the corner, and fast food chains are gearing up for what could be next. Here to break down a few trends we're keeping our eye on is Brooke DiPalma. Brooke, what's coming?

BROOKE DIPALMA: Well, unfortunately to start with, a lackluster side of the news is higher menu prices are, unfortunately, here to stay according to Wall Street analysts that I spoke with earlier this year. Of course, we've seen food away from home up 8.5% year over year. Month over month up 0.5%. So it's not necessarily a decrease, but rather a deceleration here leading to fast food giants like McDonald's, like Starbucks perhaps taking more pricing in the new year.

So bad news for consumers. But at the same time, it is a bit of a boost to the business. And just to reiterate that, Peter Saleh of BTIG emphasizing that you're going to continue to see some more pricing in 2023 as theym fast food giants, try and offset some of these inflationary pressures, which for the most part right now really haven't eased yet. And of course, if you take a deeper dive into the way that the consumers are responding is we're continuing to take that price. And so these companies will keep giving it to us.

- Yeah.

- All right, Brooke. So when we're talking about the adoption of digital, it's also a big investment what we're seeing from fast food companies. We saw McDonald's get in this space a big way a few years ago. How about for next year? What kind of technology is coming?

BROOKE DIPALMA: Yeah. Well, you can certainly hear from Wall Street and CEOs alike. Yum Brands CFO Christopher Turner saying just a few days ago out at their investor day that he has aspirations that someday it'll be 100% of its sales powered by digital. That is a long-term goal, not necessarily in 2023. But companies like McDonald's, like Burger King. Burger King, they're investing $400 million to accelerate their growth. Of course, they just named executive chairman Patrick Joel, the former CEO of Domino's Pizza, to come on to the board. So certainly making a big play here.

But that overall digital market expected to grow at an annual rate of 17.25%. That's according to Precedence Research. But when you look at exactly how much of sales per company make up, I mean, we're seeing at Yum Brands $6 billion this recent quarter, exceeding 40% of its total sales. So certainly a big opportunities here. And customers certainly taking to those mobile apps and paying with their phones, something that we saw start during the pandemic and something we're expecting to still see in 2023.

- Got to tell you, Brooke, I hate loading up my phones with apps. But I got a few in there. Chipotle is one. Hint, hint, guys. Send me some offers.