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Which Fast-Food and Pizza Company Leads the Pack in Retail Space Utilization?

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Average revenue per square foot

A company’s average revenue per square foot tells us about how efficiently it’s been utilizing its resources. The graph below depicts the average revenue per square foot generated by each company in the group we’ve selected for our analysis. Revenue per square foot is calculated by dividing revenue from company-operated restaurants by company-operated restaurants’ total square feet.

Which Fast-Food and Pizza Company Leads the Pack in Retail Space Utilization?

In 1Q16, seven of our eight fast-food restaurant companies under review generated a median revenue of $167 per square foot. (Restaurant Brands International (QSR), which operates all of its restaurants through franchisees, has not been considered for this calculation.)

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The leaders

Wendy’s Company (WEN) topped the other six companies under review in better utilization of its restaurant space, posting revenue per square foot of $212.2. The relaunch of its signature hamburgers and the use of fresh beef and made-to-order sandwiches helped WEN earn the highest revenue per square foot.

By comparison, Papa John’s (PZZA) had revenue per square foot of $204.7 in 1Q16. Sonic (SONC) earned revenue per square foot of $169.4, while Domino’s Pizza (DPZ) earned $167. Notably, DPZ forms 0.23% of the holdings of the iShares Russell Mid-Cap Growth ETF (IWP).

The laggards

In 1Q16, Pizza Hut of YUM! Brands (YUM) earned revenue per square foot of $135.6, which was the lowest in the group. McDonald’s (MCD) and Jack in the Box (JACK) had revenues per square foot of $149.7 and $158.2, respectively, during the same period.

Remember, low average revenue per square foot can come from several factors, including but not limited to a weak or unclear business model that results in low retail space utilization.

Now let’s move to EBIT (earnings before interest and tax) margins.

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