Earnings results often indicate what direction a company will take in the months ahead. With Q1 now behind us, let’s have a look at Dutch Bros (NYSE:BROS) and its peers.
Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
The 14 traditional fast food stocks we track reported a decent Q1; on average, revenues missed analyst consensus estimates by 0.5%. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and traditional fast food stocks have had a rough stretch, with share prices down 6.2% on average since the previous earnings results.
Dutch Bros (NYSE:BROS)
Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE:BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.
Dutch Bros reported revenues of $275.1 million, up 39.5% year on year, exceeding analysts' expectations by 7.6%. Overall, it was a strong quarter for the company with an impressive beat of analysts' earnings estimates and a solid beat of analysts' gross margin estimates.
Christine Barone, Chief Executive Officer and President of Dutch Bros, stated, “We are pleased with our performance in the first quarter - we delivered exceptional results and witnessed the momentum we saw leaving 2023 continue into Q1. Headlining Q1 performance was 10.0% system same shop sales growth, the strongest single quarter since Q4 2021, and 39% year-over-year growth in revenue to $275 million. These outstanding top-line metrics were underpinned by excellent margin flow through. Given this strong start to 2024, and despite a continued volatile economic backdrop for the consumer, we are comfortable raising our guidance for the year.”
Dutch Bros achieved the biggest analyst estimates beat and fastest revenue growth of the whole group. The stock is up 30.8% since reporting and currently trades at $37.19.
Is now the time to buy Dutch Bros? Access our full analysis of the earnings results here, it's free.
Best Q1: El Pollo Loco (NASDAQ:LOCO)
With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.
El Pollo Loco reported revenues of $116.2 million, up 1.4% year on year, outperforming analysts' expectations by 4.6%. It was an incredible quarter for the company with an impressive beat of analysts' earnings estimates.
The market seems happy with the results as the stock is up 38.1% since reporting. It currently trades at $11.86.
Is now the time to buy El Pollo Loco? Access our full analysis of the earnings results here, it's free.
Weakest Q1: Starbucks (NASDAQ:SBUX)
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Starbucks reported revenues of $8.56 billion, down 1.8% year on year, falling short of analysts' expectations by 6.5%. It was a weak quarter for the company with a miss of analysts' earnings estimates.
As expected, the stock is down 17.1% since the results and currently trades at $73.34.
Read our full analysis of Starbucks's results here.
Restaurant Brands (NYSE:QSR)
Formed through a strategic merger, Restaurant Brands International (NYSE:QSR) is a multinational corporation that owns three iconic fast-food chains: Burger King, Tim Hortons, and Popeyes.
Restaurant Brands reported revenues of $1.74 billion, up 9.4% year on year, surpassing analysts' expectations by 2.2%. Zooming out, it was a very strong quarter for the company with an impressive beat of analysts' gross margin estimates and a narrow beat of analysts' earnings estimates.
The stock is down 6.2% since reporting and currently trades at $69.25.
Read our full, actionable report on Restaurant Brands here, it's free.
Yum China (NYSE:YUMC)
One of China’s largest restaurant companies, Yum China (NYSE:YUMC) is an independent entity spun off from Yum! Brands in 2016.
Yum China reported revenues of $2.96 billion, up 1.4% year on year, falling short of analysts' expectations by 3.2%. Revenue aside, it was an ok quarter for the company with an impressive beat of analysts' gross margin estimates.
The stock is down 25% since reporting and currently trades at $30.
Read our full, actionable report on Yum China here, it's free.
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