Summary: A recent research note from Bernstein lays out how the ongoing conflict in Iran is creating a multi-front challenge for large quick-service restaurant operators. Management at McDonald’s and Restaurant Brands International report only modest direct disruption to U.S. supply lines to date, but broader macroeconomic effects - notably higher energy and commodity costs and signs of weaker consumer spend - are emerging and affecting franchise economics and international operations.
Bernstein highlights two parallel pressures. On the demand side, high-frequency data from early March shows a deceleration in consumer spending patterns. The most vulnerable group is low-income consumers, who allocate a larger share of household income to fuel. The note characterizes rising pump prices as a direct drag on discretionary spending for food away from home - a dynamic that bites into traffic for value-oriented restaurant concepts.
On the supply and cost side, increasing energy and commodity prices raise input costs and operating expenses for franchisees. McDonald’s has relied on comprehensive hedging programs covering energy and commodities to insulate its corporate-owned restaurants and many franchise partners from immediate market swings. Those protections have provided a buffer so far, but Bernstein warns the protection is temporary: if energy prices stay elevated into the second half of 2026, existing hedges will begin to roll over at higher market rates.
That rollover risk matters because it would transfer more of the cost burden onto franchisee profit-and-loss statements. Bernstein notes that sustained compression in the middle of the P&L could reduce the pace of capital expenditures at the franchise level, including store refreshes and planned investments in digital capabilities and expansion programs.
International operations are already feeling stress. Both companies report "spotty" supply chains in Asia and rising logistics expenses that increase overhead for local operators. For Restaurant Brands International - the parent company of Burger King, Popeyes and Tim Hortons - the combination of higher costs and local pressure makes consistent value messaging harder to deliver while protecting margins.
Analysts remain focused on long-term unit growth opportunity for both chains, but they caution that short-term earnings commentary is likely to be more guarded. Near-term comparable-store-sales trends may therefore carry a cautious tone as managements weigh input-cost inflation, consumer spending patterns and operational constraints across geographies.
Key points
- Rising energy and commodity prices are squeezing franchisee margins, potentially slowing renovations and digital expansion - sectors impacted: restaurants, consumer discretionary.
- High-frequency data from early March suggests consumer spending is cooling, particularly among low-income households with high fuel expenditures - sectors impacted: quick-service dining and consumer demand.
- International logistics disruptions, notably in Asia, are increasing costs and producing spotty supply chains for global chains - sectors impacted: logistics, international retail operations.
Risks and uncertainties
- If energy prices remain elevated through the second half of 2026, hedges would roll over at higher rates, shifting cost pressure to franchisees and potentially slowing capital investment - affects franchise profitability and capital expenditure plans.
- Continued cooling in consumer spending could depress comparable-store sales and lead to more cautious near-term earnings guidance - affects revenue and investor sentiment for restaurant operators.
- Worsening supply-chain and logistics challenges in Asia could force local operators to absorb higher overhead, complicating consistent value propositions across brands - affects international margins and pricing strategies.