Investing in Fast Food Stocks

Investing in Fast Food Stocks

Quick service, low prices, and constant menu innovation will always be things consumers crave. The fast food industry delivers in more ways than one. The early COVID-19 pandemic wasn’t great for the restaurant industry as a whole, but fast food restaurants able to offer drive-thru, curbside pickup, and delivery services held up better than their dine-in-dependent competitors.

With the pandemic now receding, at least based on consumer behavior, fast food restaurants can leverage the investments they made in digital and delivery to drive growth for years to come. And, because many fast food chains focus on offering great value, a tough economic environment poses fewer risks.

If you’re interested in investing in the fast food industry, here are seven top fast food stocks to consider: Papa John’s International ( NASDAQ:PZZA ) $3.6 billion A smaller pizza chain that’s still under a cloud of controversy related to its founder and former CEO. McDonald’s

The granddaddy of the fast food industry, McDonald’s has been serving its iconic burgers and fries since 1955. The company’s ethos centers on consistency and value. You know what you’re going to get with McDonald’s, and you know you won’t pay too much.

McDonald’s generated $23.2 billion of revenue in 2021, with the majority coming from fees paid by franchisees. McDonald’s does operate some of its own restaurants, giving it the flexibility to try new things before pushing them out to franchised locations. The company took a hit during the worst of the pandemic, but business bounced back last year. McDonald’s generated net income of $7.5 billion, giving it profit margins that are the envy of the fast food industry.

McDonald’s is focusing on digital, delivery, and drive-thru to boost sales higher in the coming years. Through its mobile app, loyalty program, and partnerships with third-party delivery companies, McDonald’s aims to be a leader in delivery while making the ordering process as easy as possible for its customers. Wendy’s

2021 was a bumper year for Wendy’s, with same-restaurant sales soaring 10%. The burger chain’s push into breakfast appears to be paying off. About 8.5% of U.S. sales now come from Wendy’s breakfast offerings, no small feat given that McDonald’s is the go-to fast food breakfast option for many commuters.

Breakfast is a big part of Wendy’s growth strategy. Unique items such as the Frosty-ccino and the Breakfast Baconator help Wendy’s stand out in a highly competitive daypart, and increased advertising spending is raising awareness among consumers. Other pillars of Wendy’s growth strategy include boosting digital sales and ramping up new restaurant openings. Wendy’s is aiming to have as many as 9,000 restaurants in operation by the end of 2025.

While McDonald’s offers investors stability, Wendy’s has the opportunity to grow faster as it expands its smaller restaurant base and takes a bigger bite out of breakfast. Restaurant Brands International

Restaurant Brands added to its portfolio with the acquisition of Firehouse Subs in late 2021. The sandwich chain boasts more than 1,200 mostly franchised locations and about $1.1 billion in systemwide sales. Firehouse Subs is Restaurant Brands’ smallest chain, but it could easily expand the brand to many thousands of locations over time.

Burger King, Tim Hortons, and Popeyes round out the Restaurant Brands stable of restaurant chains. With the addition of Firehouse Subs, the company now covers burgers and fries, coffee and breakfast, fried chicken, and sandwiches. The company is adding locations across all brands, boosting its restaurant count by about 1,200 in 2021.

Comparable sales soared last year overall, although Popeyes was a weak spot. Still, the potential for restaurant growth alone, especially among the company’s smaller brands, is reason enough to consider investing in Restaurant Brands. Domino’s Pizza

Domino’s was a big winner in 2020 and most of 2021 as consumers turned to food delivery . While almost every restaurant was forced to embrace delivery to stay afloat, Domino’s already had its own delivery infrastructure in place. By avoiding third-party delivery companies, the pizza chain maintained control over the customer experience and kept costs down.

Business is now slowing for Domino’s, particularly in the U.S. While U.S. restaurants saw comparable sales soar 11.5% in 2020, that metric rose just 3.5% in 2021. International markets are looking a bit better, but it’s clear the heyday of the pandemic has passed for Domino’s.

Despite the slowdown, Domino’s is positioned to increase its restaurant count substantially. The company expects to boost its restaurant base by as much as 8% annually over the next few years, which will help keep sales increasing even as existing restaurants face sluggish growth. […]

source Investing in Fast Food Stocks

Leave a Reply