The chips are down: pizza, fried chicken and doughnut shares plunge on ASX as living costs bite budgets
Once a symbol of cheap eating, fast food is transforming into a luxury many can no longer afford due to resurgent living costs.This shift is reflected on the ASX, where major pizza, fried chicken and doughnut outlets are seeing significant price drops, raising the question: are consumers so downbeat that they are even giving up on fast food?Shares in Domino’s Pizza, KFC operator Collins Foods and multi-brand food franchise owner Retail Food Group have all suffered double-digit falls over the past two months, coinciding with surging oil prices tied to the US-Israel war on Iran.The Guzman y Gomez share price is also down, even as the broader ASX has proven robust.Lochlan Halloway, an equity market strategist at Morningstar, says the stocks are under pressure because concerns over consumer spending are coinciding with fast-rising operational costs.“Fast food is a discretionary purchase, something that’s probably fairly easy to cut if your budget’s pinched, and so they might be a casualty of consumers just trading out of the category entirely,” Halloway says.
“You’ve also got costs increasing materially due to high fuel prices, interest rate concerns and other forms of cost pressures.You’ve got a squeeze from both ends.”Consumer confidence has plunged in Australia, as anxiety over job prospects and employment security reaches levels not seen since the early pandemic, according to the closely watched Westpac-Melbourne Institute consumer sentiment index, released earlier in April.Consumer prices are growing at their fastest pace in two and a half years, with inflation jumping to 4.6% in the year to March as the fallout from the fuel shock starts to ripple through the economy.
For many Australians, the sight of high prices on roadside fuel boards in March was enough to trigger an immediate response, with cafes reporting a fall in the sale of takeaway coffees, restaurants recording a pullback in spending, and sales of furniture, bedding and homewares sliding.The elevated fuel prices have coincided with interest rate rises, leaving many households paying more on their mortgages while grappling with rising fuel costs and living expenses.While many of the fast food stocks haven’t released updated revenue forecasts, the general pessimism has infected investors who assume customers are spending less on takeaway.There is a question over whether traditional fast food chains, including McDonald’s, are now seen as too expensive for what they offer in an increasingly competitive Australian market.The fast food market is highly sensitive to price changes, given customers constantly weigh the cost and convenience of buying takeaway.
“As far as the stock price reactions go, the market does have a tendency to overreact during these periods,” says Halloway,“But some selling is expected and probably justified, because this is a risk for the earnings outlook for these businesses,”Shares in ASX-listed Domino’s fell more than 10% in a single trading session on Tuesday after its US listed namesake released underwhelming financials,Shares in Retail Food Group, which houses Gloria Jean’s, Donut King and Crust Gourmet Pizza, among other brands, have fallen more than 40% in 2026, while the stock price of KFC operator Collins Foods is down 25% over the past six months,While specific business issues have contributed to some of those falls, all have suffered from deteriorating consumer sentiment.
The sharp share price falls are somewhat counterintuitive given fast food stocks are traditionally resilient during economic downturns because they capture customers trading down from restaurants.Sophia Mulligan, investment analyst at Wilson Asset Management, says there are fears the “trade-down defensiveness” that had helped the sector in the past won’t hold this time.She says high petrol prices are also hurting traffic numbers, with a knock-on effect on drive-through sales.
If you’re not Thames, the water looks lovely for investors | Nils Pratley
Thames Water, with occasional cameos by ugly little siblings Southern Water and South East Water, grabs most of the attention in the sector for obvious reasons. So it’s easy to overlook what’s happening further north. Short answer: the new era of higher bills and higher spending on water infrastructure will feel splendid if you’re United Utilities, licence-holder in north-west England, or Severn Trent, operating in the Midlands.The former’s share price surged 11% on Thursday, the sort of thing that shouldn’t happen at a utility where success is meant to be defined in terms of dull predictability. And it’s definitely unusual to see a one-day valuation jump of that size when the company is issuing £800m-worth of new shares
Bank of England warns ‘higher inflation unavoidable’ after holding interest rates
The Bank of England has left interest rates unchanged at 3.75% but said the UK may need to brace for increases later this year, as “higher inflation is unavoidable” as a result of the war in the Middle East.The Bank’s rate-setting monetary policy committee (MPC) voted to leave borrowing costs on hold, but said that if energy costs stayed persistently high it might have to take a more “forceful” response to keep inflation under control.The nine-member MPC was split 8-1 in its decision to keep borrowing costs on hold for the third consecutive meeting.Andrew Bailey, the governor of the Bank of England, said: “Where we go from here will depend on the size and duration of the shock to energy prices” as the conflict in the Middle East evolves
Musk faces third day of questioning in contentious trial over OpenAI’s founding
Elon Musk’s court case against Sam Altman continues on Thursday, after a day of contentious exchanges during OpenAI’s cross-examination of the Tesla CEO. Musk will face another round of questioning before his lawyer calls more witnesses, including OpenAI’s president, Greg Brockman.Witness testimony and evidence has revealed formerly private emails, text messages and diary entries surrounding the formation of OpenAI, giving a behind-the-scenes look at how the tech behemoth was created. Many of the tech industry’s most powerful players are named as witnesses and will give their account on the origins of Musk and Altman’s bitter feud. Altman is set to testify later in the trial, which will last three weeks
AI outperforms doctors in Harvard trial of emergency triage diagnoses
From George Clooney in ER to Noah Wyle in The Pitt, emergency department doctors have long been popular heroes. But will it soon be time to hang up the scrubs?A groundbreaking Harvard study has found that AI systems outperformed human doctors in high-pressure emergency medicine triage, diagnosing more accurately in the potentially life and death moments when people are first rushed to hospital.The results were described by independent experts as showing “a genuine step forward” in the clinical reasoning of AIs and came as part of trials that tested the responses of hundreds of doctors against an AI.The authors said the results, published in the journal Science, showed large language models (LLMs) “have eclipsed most benchmarks of clinical reasoning”.One experiment focused on 76 patients who arrived at the emergency room of a Boston hospital
Is this the end for LIV? Where does Saudi withdrawal leave golf and the players?
Can LIV find new backers and what are the options for Bryson DeChambeau, Jon Rahm, Lee Westwood and others?Confirmation that Saudi Arabia’s Public Investment Fund will cease funding the LIV Golf tour will have huge ramifications, for the future of the tour itself, the players and across golf’s traditional heartlands. Where does PIF’s withdrawal leave them all?Certainly in its present form, as a 14-event entity worth $30m per tournament. LIV was entirely reliant on Saudi Arabian money, to the tune of more than $5bn since 2021. The cash burn rate, albeit slowed down recently, has always been unsustainable.It is feasible that Scott O’Neil, LIV’s chief executive, will find backers for the business at a level which means it can be prolonged in some way
LIV Golf races against time for investment with confirmation Saudi funding will end in 2026
LIV Golf’s race to secure at least a watered-down future is formally under way after Saudi Arabia’s Public Investment Fund (PIF) confirmed it will cease to fund the breakaway circuit at the end of this year. Fears over LIV’s existence are inescapable given the PIF has bestowed in excess of $5bn on the tour since 2021. Tournaments started in the following year; there is a very real chance the 2026 season will prove LIV’s last.LIV had already confirmed appointment of new board members, aimed with the specific task of raising finance, by the time the PIF stipulated its position on Thursday. “PIF has made the decision to fund LIV Golf only for the remainder of the 2026 season,” read a statement
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