Taste the Profits of Fast Food
The June jobs report added 288,000 jobs and lowered unemployment to a low 6.1%, which was the best 6 month run since 1999. A large amount of these jobs are being added in the chain restaurant industry where business is lucrative and pay for employee’s is relatively inexpensive. The modo of America is getting food “fast and easily” and companies like (MCD) McDonald’s, Chipotle (CMG), Wendy’s Co. (WEN), and Dunkin’ Brands (DNKN) are taking the globe by storm, cashing in on peoples cravings.
The fast food industry has very high barriers to entry. A lot of man power, capital, and market share goes into the success of these companies. Due to their sheer mass, these fast food giants are purchasing their utilities in bulk, and supplying their customer base with inexpensive food. With so much of their funding allocated to advertising, these corporations are pushing out the mom and pop competition. In the eyes of a consumer, the monetary amount of a meal out ways the quality of food, which by no means is going to change anytime soon. My favorite fast food potential investments includeMcDonald’s (MCD), Yum! Brands (YUM), and Dunkin’ Brands (DNKN).
McDonald’s has a market cap of 98.8 Billion, and within the past 5 years, their stock price has risen more than $30 per share. Currently near its 52 week high, MCD pays an enormous dividend of 3.20%. Within the past three months, their stock has ran 8% with a year to date return of 4%. As McDonald’s competitors are focusing on expansion of locations, MCD is focusing on customer consumption serving nearly 68 million people a day around the world. Their quarterly earnings are scheduled for the 22nd of July, yet had a 2% fall in Q1.
At a share price of $82 and one of McDonald’s strongest competitors, Yum! Brands (YUM) operates four franchises including Taco bell, KFC, Pizza Hut, and WingStreet restaurants across the world. With a 36.25 Billion dollar market cap, Yum! Brands stock shows a very stable longterm uptrend. Although YUM had somewhat of a rough year last year, they are expanding their chains in countries such as China and Japan. They had a estimated per share growth of around 13% for the last ten years and a year to date return of 9%, which is stable news for a longterm investment.
Dunkin’ Donuts has a market cap of 4.82 Billion and rapidly growing. With the mere recent public appearance of DNKN, there stock has doubled since 2011. Previously concentrated in America, Dunkin’ Brands have been expanding into countries worldwide with huge success. A brand with the given criteria is a great longterm investment due to its ability to expand and potential evaluation.
Nearly 700 Billion dollars is racked in by the restaurant industry every year, in which they employ close to ten percent of the United States workforce. The fast food industry has had exponential growth and the continuation of this growth is inevitable as people become more dependent on cheap and good tasting food. Iconic brands like these are hear to stay.