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How Fast Food Restaurants Are Expanding Their Businesses

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Unit growth

In the previous part of this series, we looked at same-store sales growth. Now let’s look at another revenue driver: unit growth. Expansion through unit growth requires capital expenditure, so investors are often careful when comparing companies’ unit growth with various business models. All four of the fast food restaurant companies we’re covering in this series are focusing on franchising for expansion.

Unit growth in the last 12 months

During the last four quarters, Burger King, operating under Restaurant Brands International (QSR), has increased its unit count by 1,010, from 15,243 to 16,253. That represents a unit growth of 6.6%. The company operates all its restaurants through franchises.

Burger King was followed by Wendy’s (WEN) with a unit growth of 1.3%. During last four quarters, WEN has increased its unit count by 83 units, from 6,503 to 6,586. During the same period, the unit count of franchised restaurants has increased by 177 units, while the unit count of company-owned restaurants has declined by 94 units.

Wendy’s was followed by McDonald’s (MCD). During the last four quarters, McDonald’s has increased its unit count by 361, from 36,615 to 36,976. Unit growth was driven by an increase in the unit count of franchised restaurants by 177. During the same period, the unit count of company-owned restaurants fell by 94 units.

During the last four quarters, the unit count of the Jack in the Box brand operating under Jack in the Box (JACK) has fallen by four units to 2,251. Compared to 3Q16, the company operated 141 fewer company-owned restaurants in 3Q17 due to refranchising. During the same period, the unit count of franchised restaurants has increased by 137 units.

Next, let’s look at analysts’ revenue expectations for the next four quarters.

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