Updated from 9:46 a.m. EST with information on a new offering from Shake Shack.
To escape the grips of the current U.S. restaurant recession, it looks like all a fast-food joint needs is a new premium-priced sandwich that consumers can't seem to resist trying.
Shares of better burger joint Shake Shack (SHAK) surged as much as 11% in after-hours trading on Wednesday before ebbing to 8.5% as the company reported third-quarter sales rose 40% from the prior year to $74.6 million. Wall Street expected sales of $69.3 million. Earnings came in at 15 cents a share, beating analyst forecasts by 1 cent.
In the face of lackluster third quarter sales from fast food joints such as McDonald's (MCD) due to more people eating at home, Shake Shack managed to circumvent what has been dubbed the U.S. restaurant recession. The company's same-store sales rose 2.9%, beating estimates for a 1.9% increase, as it saw momentum behind a new premium hamburger with bacon and cheddar cheese.
The company told analysts on a conference call that it will remain focused on product innovation to keep customers interested, with plans to launch a new hamburger and chicken sandwich in early 2017 that have BBQ sauce and beer-battered shallots.
Wendy's also said Wednesday its third-quarter earnings came in at 11 cents a share, beating analyst estimates for 10 cents a share. Same-store sales in North America rose 1.4%, surpassing Wall Street estimates for an increase of 0.9%. Wendy's sales were buoyed by marketing for a new chicken sandwich that features a multi-grain bun and better grilling procedures, as well as the bacon-rich Baconator hamburger.
The solid third-quarter led Wendy's to lifts its full-year earnings outlook by 1 cent to 40 cents a share to 41 cents. Wendy's shares rose 1.8% on the day's trading session.
Similar to Wendy's, Arby's is rolling right along in the U.S. on the back of new higher-priced products.
The privately held fast-food chain, which has 3,300 restaurants worldwide, reported U.S. same-store sales gained a solid 2.4% during the third quarter due to an increased number of transactions. It marked a mind-boggling 24 consecutive quarters of same-store sales growth for a chain founded in 1964.
Arby's saw success with a limited-time deli meat sandwich and another with brown sugar glazed bacon, both of which were higher in price compared to its standard roast beef sandwich.
Arby's success with fancier grub has continued into the fourth quarter with a new deer meat sandwich. Arby's new venison sandwich is being tested in 17 markets this month, mostly in hunting-friendly areas Tennessee, Georgia, Minnesota, Wisconsin, Michigan and Pennsylvania. The sandwich is reportedly selling out quickly.
Meanwhile, the traditional burger value players continued to struggle in the third quarter.
Sales at McDonald's all-important U.S. business continued to slow amid people choosing to eat at home due to falling grocery store prices. McDonald's U.S. sales rose 1.3%, relatively in line with analyst estimates, but a slower pace than the 1.8% increase seen in the second quarter. In the first quarter, McDonald's U.S. same-store sales rose 5.4%.