Middle Eastern conflict "burns" to the dinner table! Fast food giant warns: costs and demand face a double hit

As the ongoing war in Iran continues to put pressure on global demand and supply chains, fast food giants are increasingly facing a more complex operating environment.

According to a recent research report by Bernstein, management at both McDonald’s and Restaurant Brands International (NYSE: QSR) recently stated that while the direct impact of the war in Iran on U.S. supply chains remains limited, broader macroeconomic effects are becoming increasingly apparent.

Restaurant Brands International is the parent company of fast food chains such as Burger King, Popeyes, and Tim Hortons.

Bernstein warns that as energy and commodity costs continue to rise, this is expected to lead to further profit squeezes for both companies. What’s worse is that data from early March indicates that the spending demand of the primary consumer base for both companies has cooled due to the impact of the war in Iran.

In the U.S. market, the primary consumer base for both companies consists of low-income consumers who are already financially strained, and this conflict has increased spending pressures on this group.

Analysts point out that the war in Iran has driven U.S. gasoline prices to soar, and fuel expenses account for a particularly high proportion of income for these low-income groups, meaning that the recent spike in gasoline prices has hit them the hardest, effectively imposing a direct tax on their discretionary spending such as dining out.

McDonald’s has long positioned itself as a low-cost and value-driven brand in the U.S. market, making its stock a “defensive” investment during periods of economic downturn. However, the severity of the current energy shock has also impacted the demand for this fast-food giant known for its low prices. It is reported that McDonald’s has closed some restaurants, and its supply chain is also under strain.

On the supply side, McDonald’s currently utilizes its strong energy and commodity hedging programs to protect its company-owned and franchise stores from short-term price fluctuations. However, Bernstein warns that if international energy prices remain high in the second half of 2026, these hedges will ultimately mature at higher market prices. At that time, McDonald’s may be forced to slow down its store renovations and digital expansion plans.

The geopolitical situation has particularly severe implications for Asia, with both companies reporting “unstable” supply chains and rising logistics costs. Wall Street analysts warn that recent financial reports from both companies may reflect the impact of the Iranian conflict on their global same-store sales.

(Source: Financial Associated Press)