uploads/2017/09/4-50.jpg

How Are Fast Food Restaurants Expanding?

By

Updated

Unit growth

Apart from increasing a company’s revenue, unit growth also increases the company’s visibility. Expansion through company-owned restaurants requires excess capital expenditure, so investors should be careful when comparing the unit growth of different companies. However, all four companies considered for our analysis are focusing on franchising for expansion.

Article continues below advertisement

Unit growth in last four quarters

Burger King, which operates under the umbrella of Restaurant Brands International (QSR), has outperformed its peers in unit growth. During the last four quarters, the brand has increased its restaurant count by 900 units to 16,000, which is 6.0% unit growth.

Burger King was followed by McDonald’s (MCD) with unit growth of 1.4%. During the last four quarters, the company has increased its overall unit count by 507 restaurants, which represents an increase of 1.4% from 36,504 to 37,011. During the same period, the unit count of franchised restaurants has risen 1,562 units, while the unit count of company-owned restaurants has fallen by 1,062 units due to refranchising.

During the last four quarters, Wendy’s (WEN) has increased its overall restaurant count by 74 units, which represents growth of 1.1% from 6,490 to 6,564. During the same period, the unit count of company-owned restaurants has fallen by 251 units, while the unit count of franchised restaurants has risen by 325 units.

The Jack in the Box brand, which operates under the umbrella of Jack in the Box (JACK), has increased its overall restaurant count by one unit to 2,255 restaurants. During the same period, the brand has increased the unit count of franchised restaurants by 76 units to 1,915, while the unit count of company-owned restaurants has fallen 75 units to 340 units.

Next, we’ll look at EBIT margins of fast food restaurants in 2Q17.

Advertisement

More From Market Realist