Wrapping up Q2 earnings, we look at the numbers and key takeaways for the traditional fast food stocks, including Yum China (NYSE:YUMC) 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 were in line with analysts’ consensus estimates.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting 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 12.5% on average since the latest earnings results.
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 $2.68 billion, flat year on year. This print fell short of analysts’ expectations by 2.9%. Overall, it was a slower quarter for the company with some shareholders anticipating a better outcome.
Joey Wat, CEO of Yum China, commented, "We achieved our most profitable second quarter since the spin-off, with core operating profit growing by 12% despite challenging industry dynamics. Our sharp focus on value-for-money and innovative new products worked well, driving robust same-store transaction growth. We took proactive actions to improve operational efficiency, stabilizing restaurant margin and expanding OP margin year over year."
Yum China delivered the weakest performance against analyst estimates of the whole group. Interestingly, the stock is up 70% since reporting and currently trades at $50.69.
Read our full report on Yum China 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 very strong quarter with an impressive beat of analysts’ earnings estimates.
Dutch Bros pulled off the fastest revenue growth and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 16.1% since reporting. It currently trades at $31.64.
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 42.4% since the results and currently trades at $12.66.
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 number beat analysts’ expectations by 1.5%. Overall, it was a very strong quarter as it also produced a decent beat of analysts’ earnings estimates.
The stock is up 15.8% since reporting and currently trades at $13.73.
Read our full, actionable report on El Pollo Loco here, it’s free.
Jack in the Box (NASDAQ:JACK)
Delighting customers since its inception in 1951, Jack in the Box (NASDAQ:JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.
Jack in the Box reported revenues of $369.2 million, down 7% year on year. This number was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it underperformed in other aspects of the business.
Jack in the Box had the slowest revenue growth among its peers. The stock is down 16% since reporting and currently trades at $44.82.
Read our full, actionable report on Jack in the Box here, it’s free.
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