NEW YORK (TheStreet) -- Due to a recovering economy and what industry experts believe were historically high levels of pent-up consumer demand, restaurant-industry sales were expected to hit record highs in 2014, according to the National Restaurant Association.
Due to rising food costs and a weak consumer spending climate, not to mention -- a few geopolitical issues -- the restaurant industry didn't live up to expectations, gaining just 6.34%, according to research firm Fidelity, trailing the 7.41% gain in the Dow Jones Industrial Average and the 12.03% gain in the S&P 500.
MCD data by YCharts
In some case, weak same-store sales and declining consumer traffic were the biggest hurdles to growth. That, and rising health and obesity concerns, causing consumers to rethink their eating habits and spurring a trend towards “good for you” products.
Weak operations were only part of the problem hurting share prices. There were also some self-inflicted wounds.
For instance, Friday, the National Labor Relations Board filed complaints in 78 cases against McDonald's and franchisees across the country, alleging that McDonald’s and its franchisees violated worker rights. This is the most recent case. But for most of 2014, McDonald's has been hurt by negative press, including what some believe are poor wages for its frontline workers.
Then there was the food scandal. In July, an undercover news report depicted Shanghai Husi, which supplies meat to both Yum Brands and McDonald's, to have allegedly re-labeled expired meat. The supplier was accused as having deliberately ignored proper food safety protocols.
Both McDonald's and Yum apologized for the incident. But neither have fully recovered from the negative publicity. To the extent 2015 will be different remains to be seen. But both McDonald's and Yum! have to figure out ways to fix their image, while giving a more health-conscious consumer more choices.