As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the traditional fast food industry, including Yum! Brands (NYSE:YUM) 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 mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.6%.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Luckily, traditional fast food stocks have performed well with share prices up 12.6% on average since the latest earnings results.
Yum! Brands (NYSE:YUM)
Spun off as an independent company from PepsiCo, Yum! Brands (NYSE:YUM) is a multinational corporation that owns KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill.
Yum! Brands reported revenues of $1.76 billion, up 4.5% year on year. This print fell short of analysts’ expectations by 2.2%. Overall, it was a slower quarter for the company with some shareholders anticipating a better outcome.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $132.85.
Is now the time to buy Yum! Brands? Access our full analysis of the earnings results here, it’s free.
Best Q2: 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 $324.9 million, up 30% year on year, outperforming analysts’ expectations by 2.4%. The business had a stunning quarter with an impressive beat of analysts’ earnings estimates and full-year revenue guidance exceeding analysts’ expectations.
Dutch Bros delivered the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 14.3% since reporting. It currently trades at $32.33.
Is now the time to buy Dutch Bros? Access our full analysis of the earnings results here, it’s free.
Portillo's (NASDAQ:PTLO)
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Portillo's reported revenues of $181.9 million, up 7.5% year on year, falling short of analysts’ expectations by 1.4%. It was a softer quarter as it posted a miss of analysts’ earnings estimates.
Interestingly, the stock is up 35% since the results and currently trades at $12.
Read our full analysis of Portillo’s results here.
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 $122.2 million, flat year on year. This result topped analysts’ expectations by 1.5%. Overall, it was a very strong quarter as it also logged a decent beat of analysts’ earnings estimates.
The stock is up 15% since reporting and currently trades at $13.64.
Read our full, actionable report on El Pollo Loco here, it’s free.
McDonald's (NYSE:MCD)
Arguably one of the most iconic brands in the world, McDonald’s (NYSE:MCD) is a fast-food behemoth known for its convenience, value, and wide assortment of menu items.
McDonald's reported revenues of $6.49 billion, flat year on year. This number missed analysts’ expectations by 2.1%. It was a slower quarter as it also recorded a miss of analysts’ earnings estimates.
The stock is up 21.1% since reporting and currently trades at $305.07.
Read our full, actionable report on McDonald's here, it’s free.
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