Former McDonald’s CEO Ed Rensi Has Battled the $15 Minimum Wage Idea for Years
Opportunities and risks that Dunkin’ Brands investors must know
It’s no big secret that Dunkin’ Donuts has the highest relative leverage in the industry. Leverage comes with a number of risks— a substantial risk is the interest paid on debt.
Understanding Starbucks’ cost structure and operating expenses
Starbucks’ main cost driver is its price per pound of coffee beans. The two most consumed coffee beans are Arabica and Robusta blends.
Wage Gains for Retail Trade Outpace Private Sector Payroll Gains
The pace of wage gains for the retail sector has been slower than growth rates experienced in pre-recession times.
Why more Europeans could be eating at McDonalds and Yum!
Employment could be turning around The below chart shows employment growth for countries in Europe. The Eurozone, which only includes countries using the euro (so, excluding the United Kingdom and Russia), has been experiencing a declining growth rate over the past two years. While the overall growth was in positive territory from mid-2010 to mid-2011, […]
Why Chipotle Has A Lot Of Room For Unit Growth
Unit growth isn’t the only factor that drives revenue. A restaurant can keep adding more restaurants. Eventually, it can capture newer markets. This is what Chipotle is doing.
Do Restaurant Operators Expect to Increase Capex in 2H15?
The expected capital expenditure index increased by 1% to 101.7 in April from 100.7 in March.
Can 2Q16 Results Drive McDonald’s Valuation Multiple Up?
Valuation multiple Investors should look at valuation multiples when deciding whether to enter or exit a stock. Valuation multiples are driven by perceived growth, risk and uncertainties, and investors’ willingness to pay for a stock. There are various multiples to evaluate a stock. In this article, we’ll use the PE (price-to-earnings) ratio due to its […]
Who’s Loving McDonald’s Valuation Multiple Now?
As of April 26, 2017, McDonald’s was trading at PE multiple of 21.9x, as compared to 21.3x before the announcement of its 1Q17 earnings.
How Does Starbucks’s Valuation Compare?
Valuation multiple Investors may want to look at valuation multiples when deciding whether to buy or sell stocks. Valuation multiples are driven by perceived growth, risks and uncertainties, and investors’ willingness to pay. Analysts use various multiples to evaluate stocks. In this article, we’ll use the PE (price-to-earnings) multiple due to its high visibility in […]
How McDonald’s Outperformed Analysts’ Same-Store Sales Growth Estimates
For 1Q17, McDonald’s (MCD) has posted overall SSSG of 4%, as compared to the analysts’ estimate of 1%. Its United States segment posted SSSG of 1.7%.
How Will McDonald’s Expand Its EBIT Margins?
Wall Street analysts are expecting McDonald’s (MCD) to post EBIT of $2.1 billion in 3Q16. This represents an EBIT margin of 33.2% compared to 30.7% in 3Q15.
Why Restaurant Operators Are Cautious About Business Conditions
According to the NRA, the restaurant operators will become “more cautious” towards business conditions over the next six months.
Will McDonald’s 2Q16 Earnings Beat Analysts’ Estimates?
So far in this series, we’ve discussed McDonald’s (MCD) estimated revenue, sources of revenue, and estimated EBIT (earnings before interest and tax) margins.
Which Fast Food Restaurants Do Analysts Favor?
Jack in the Box (JACK) and Restaurant Brands International (QSR) are analysts’ favorites among the companies we’ve reviewed in this series.
Could Yum! Brands’ Margins Increase in 1Q16?
With positive same-store sales growth expected in all three of YUM’s divisions, analysts are expecting the leverage to improve the company’s margins.
Weak Fiscal 3Q17 Sales Lower Starbucks’s Valuation Multiple
Valuation multiple We’ve used the forward PE (price-to-earnings) multiple for our analysis, due to its high visibility in Starbucks’s (SBUX) earnings. The forward PE multiple is calculated by dividing a company’s stock price by analysts’ earnings estimates for the next four quarters. Starbucks’s forward PE multiple Starbucks’ lower-than-expected SSSG (same-store sales growth) in fiscal 3Q17, lowering of […]
Can Investors Expect Momentum from McDonald’s 3Q16 Earnings?
McDonald’s (MCD) is scheduled to announce its 3Q16 results on October 21, 2016. As of October 13, 2016, it was trading at $115.40, a fall of 9.4% from July 25.
How Does McDonald’s Valuation Multiple Compare with Its Peers’?
As of March 26, McDonald’s (MCD) was trading at a forward PE multiple of 22.5x compared to 21.6x at the beginning of 2019.
Why Restaurant Brands’ Revenue Fell Short of Analysts’ Estimate
In the second quarter, Restaurant Brands International (QSR) saw revenue of $1.34 billion, falling short of analysts’ estimate of $1.38 billion due to lower-than-expected SSSG (same-store sales growth) at Tim Hortons and Burger King.
What Could Drive Starbucks’s Same-Store Sales Growth in 2016?
Over the past four quarters, Starbucks’s same-store sales growth has increased due to growth in ticket and traffic.
Can McDonald’s Beat Analysts’ Earnings Estimates Again in 3Q16?
In the last four quarters, McDonald’s has beaten analysts’ estimates. In 3Q16, analysts are expecting the company to post EPS of $1.48, a year-over-year rise of 6.1%.
McDonald’s Beats Top- and Bottom-Line Estimates in 1Q18
After posting its 1Q18 earnings today, McDonald’s (MCD) was trading 4.0% above yesterday’s closing price.
Beef Prices: 2015–2016 Outlook for the Restaurant Industry
Although beef prices recently increased slightly, they’ve been on a downtrend trend since the beginning of 2015. They’re expected to remain elevated for the rest of 2015.
Domino’s Adds 51 New Stores In 4Q14
Domino’s added more units internationally last quarter. The company added a total of 662 units in the last 12 months.
What’s Expected for Restaurant Brands’ Revenue in the Next Year
In the next four quarters, analysts expect Restaurant Brands International’s (QSR) revenue to rise 10.1% YoY (year-over-year) to $5.55 billion from $5.04 billion.
What Will Drive Dunkin’ Brands’ 2Q17 Earnings?
In 2Q17, analysts expect Dunkin’ Brands (DNKN) to post EPS (earnings per share) of $0.62, which represents a rise of 8.8% from its EPS of $0.57 in 2Q16.
Eurozone Retail Activity Dipped In June, HEDJ Down 2.32%
The Eurozone’s Retail PMI (purchasing managers’ index) dipped to 50.4 in June from the 51.4 recorded in May.
More Upside to Come for Chipotle’s Stock?
After posting lower-than-expected 3Q16 earnings on October 25, 2016, Chipotle Mexican Grill’s (CMG) stock price declined to $368 on October 26, 2016.
Why Investors Are Optimistic about Dunkin’ Brands’ Q2 Earnings
Dunkin’ Brands (DNKN) is scheduled to post its second-quarter earnings before the market opens on July 26.
Starbucks Met Analysts’ Earnings Estimates in Fiscal 2Q18
Starbucks (SBUX) posted adjusted EPS (earnings per share) of $0.53 in fiscal 2Q18, which was in line with analysts’ expectations.
Wendy’s Stock Falls after Mizuho Downgrade
The Mizuho downgrade appears to have led a fall in Wendy’s (WEN) stock price.
Shake Shack Stock Rose on Increased Target Price by SunTrust
On January 3, 2017, Shake Shack was trading at $16.70, which represents an increase of 7.8% from its previous day’s closing price.
Starbucks Analysts: Their Ratings and Their Targets
Looking at analysts’ ratings for Starbucks, about 79% of analysts have “buy” recommendations for Starbucks, 21% have “hold” recommendations, and none has “sell” recommendations.
Why Analysts Are Expecting Starbucks’s Earnings to Fall in 3Q17
For fiscal 4Q17, analysts are expecting Starbucks (SBUX) to post EPS (earnings per share) of $0.55, which represents a fall of 1.8% from $0.56 in fiscal 4Q16.
The Redbook shows strength in retail sales due to a late Easter
The Redbook showed some strength in same-store sales during the April 19 week by recording a year-on-year rate of +3.7%.
Inside JACK’s Strong Fiscal 2Q16 Results and Share Price Reaction
JACK reported fiscal 2Q16 revenue of $361.2 million and adjusted EPS of $0.90. Compared to 2Q15, the company’s revenue rose by 0.8%, and its EPS grew 25.5%.
McDonald’s on the Street: Analyst Recommendations ahead of the 4Q17 Earnings
As of January 22, MCD was trading at $176.21. Analysts expect the company’s stock price to reach $186.07 in the next 12 months.
How Does McDonald’s Valuation Multiple Compare with Peers?
Due to high visibility in McDonald’s (MCD) valuation multiple, we have opted for the forward PE (price-to-earnings) multiple.
Yum! Brands’ Management Initiatives and Outlook for 2015
Management stated that it expects the second quarter EPS to lag by 20% YoY. It expects full-year EPS growth of 10% in 2015.
Why Analysts Expect Chipotle’s EPS to Rise in 2019
Analysts expect Chipotle Mexican Grill (CMG) to post EPS of $12.25 in 2019.
Six-Month Expansion Outlook Positive for Restaurant Operators
The six-month outlook for capital expenditure plans as of October 2014 was 101.8, which has been above 100 levels for the past 12 months.
Where Will Yum! Brands Trade in the Next Few Quarters?
Yum! Brands has a forward PE ratio of 25x. This indicates that the stock is valued fairly. It’s a stable company with a long history of EPS growth.
Why Analysts Expect Shake Shack’s EPS to Fall in Q4
In the fourth quarter, analysts expect Shake Shack (SHAK) to post adjusted EPS of $0.03, a fall of 69% from $0.10 in the corresponding quarter of 2017.
Which Fast Food Restaurants Saw Highest Earnings Margin in 3Q17?
With 100% of its restaurants franchised, Restaurant Brands International (QSR) enjoys higher margins than its peers.
Starbucks Adds 1,600 Units in 2014
In the fiscal year ending in 2014, SBUX added 1,599 units. This was 8% unit growth year-over-year, or YoY. The most units were added in the China and Asia-Pacific, or CAP, market.
Will McDonald’s Outperform Analysts’ EPS Expectations in Q2 2018?
Analysts expect McDonald’s (MCD) to post EPS of $1.93 in the second quarter, a rise of 11.6% year-over-year.
Why Analysts Are Recommending “Buy” for Starbucks
Target price On January 13, 2017, Starbucks (SBUX) was trading at $57.85. The company’s share price may already have been factored into the estimates we’ve discussed in this series. In this article, we’ll look at analysts’ recommendations and estimated target prices for the stock over the next 12 months. Despite Starbucks posting strong 4Q16 earnings […]
Why Investors Are Optimistic about McDonald’s 4Q17 Earnings
McDonald’s (MCD) is scheduled to announce its 4Q17 earnings before the market opens on January 30, 2018.
Shake Shack’s Unit Growth: A Second Location in Las Vegas
Shake Shack stated that it will double its company-operated store count over the next three years. It expects that number to triple in the next five years.
Bloomin’ Brands Has 3 Key Costs of Operation
Bloomin’ Brands’ revenue was affected by as much as 0.7% due to price increases for beef and seafood. A restaurant can do little when facing rising prices
Restaurant Capex Outlook Remains Elevated in May
The expected capital expenditure index increased by 0.9% to 100.8 in May from 101.7 in April.
Why Yum! Brands Is Expected To Report Lower EBITDA
Wall Street analysts’ estimated EBITDA for the fourth quarter is $633 million—compared to $918 million in the same quarter last year.
Why Do Analysts Recommend a ‘Hold’ for McDonald’s?
On April 22, 2016, McDonald’s (MCD), which forms 1.3% of the Vanguard Growth ETF (VUG), was trading at $125.5.
Starbucks: Analysts Favor a ‘Hold’
Of the 31 analysts that follow Starbucks (SBUX), 45.2% favor a “buy,” while 54.8% favor a “hold.” None of the analysts favor a “sell” option.
Why Investors Are Confident in YUM ahead of Its 3Q16 Results
Yum! Brands develops, operates, franchises, and licenses the Pizza Hut, KFC, and Taco Bell brands. It’s set to announce its 3Q16 results on October 5, 2016.
Why Analysts Are Expecting Wendy’s EBIT Margins to Rise in 2Q17
In 2Q17, analysts are expecting Wendy’s (WEN) to post EBIT (earnings before interest and tax) of $78.1 million.
Yum! Brands’ 4Q15 Same-Store Sales Growth Is 2% in China
Following its dismal performance in 3Q15, Yum! decided to release its same-store sales growth performance for China on a monthly basis.
Analysts Favor ‘Hold’ Ratings ahead of CMG’s Q4 Earnings
Of the 33 analysts that follow Chipotle Mexican Grill (CMG), 36.4% have given the stock “buys,” 48.5% have given it “holds,” and 15.2% have given it “sells.”
Why Did JACK Record Lower Same-Store Sales Growth in 1Q16?
The Jack in the Box brand recorded a systemwide same-store sales growth of 1.4%. The franchise-operated restaurants posted 1.8% while the company-operated restaurants posted 0.5%.
Consumer prices still deflated by gasoline
In the 12 months leading up to January, prices fell 0.1%, the first decline since October 2009. In December, consumer prices rose by 0.8% year-over-year.
When Will Yum! Complete the Separation of Its China Division?
On October 20, Yum! announced that it will separate its China division from the rest of its business. It’s expected to complete this by the end of 2016.
Will Success Continue for Jack in the Box?
Same-store sales at Jack in the Box’s company-operated restaurants are expected to grow 4%–6% in 3Q15 and 4.5%–5.5% for the year. Qdoba’s sales are expected to increase 6%–8%.
Why Are Pork Prices Stabilizing?
Pork prices have dropped significantly in 2015 from the high of $1.38 per pound in June 2014 to the low of $0.65 per pound in March 2015.
Analysts Revised the Price Target after McDonald’s Earnings
Wall Street analysts set a price target of $125.1 for the next 12 months with a return potential of 5% from the closing price of $119.2 on January 25.
Why McDonald’s 3Q14 earnings were disappointing
In the third quarter earnings, McDonald’s reported a diluted EPS of $1.09. It declined by 28%—compared to an EPS of $1.52 in the same quarter last year.
How Does Shake Shack Compare to Its Peers?
Shake Shack (SHAK) has an enterprise-value-to-revenue multiple of 13.9x, compared to the peer average of 3.5x.
Why Investors Weren’t Impressed by Starbucks’s Fiscal 2Q17
Starbucks (SBUX) posted its fiscal 2Q17 earnings after the market closed on April 27, 2017. Its EPS was $0.45 on revenues of $5.3 billion.
What to Expect from Starbucks’s Revenue in Next 4 Quarters
In the next four quarters, analysts are expecting Starbucks (SBUX) to post revenue of $23.8 billion, which represents an increase of 8.4% from $22.0 billion in the corresponding quarters of the previous year.
March Food Inflation Figures Keep Restaurant Margins Tight
High food inflation can squeeze a restaurant’s operating margins—particularly if it doesn’t pass on the cost to consumers.
Why low inflation reflects weak sales but is a long-term positive
CPI growth running below 2.0% The most widely reported inflation rate is the CPI (Consumer Price Index). Since May 2012, US consumer inflation (measured by the year-over-year change in the consumer price index) has generally stayed below 2.0%. In August 2013, the overall inflation rate stood at 1.5% compared to the same month last year, […]
What to Expect from the Upcoming Domino’s Earnings
Domino’s Pizza (DPZ) is expected to release its first quarter 2015 earnings on April 23. Year-to-date, the stock is up 5%.
Why Yum! Brands has specific initiatives for its divisions
For the Pizza Hut division, management is focused on driving digital initiatives. According the company, digital initiatives were over 40%. This was an increase of over 5% from 2Q14.
Why poor comps affected McDonald’s revenues
With disappointing same-store sales performance across all four segments, it isn’t surprising that McDonald’s reported revenues of $6,987 million—a 4.5% decline.
BYND Leads Alt-Meat Market, Faces New Competitors
On Friday, investment bank UBS started coverage on Beyond Meat Stock (BYND). At 10:08 AM ET today, the stock was trading 4.4% lower at $76.5.
Must-know: Chipotle Mexican Grill’s food costs
CMG reported $372 million in food costs in 3Q14. Food costs accounted for 34.3% of the revenue. It was an increase of 70 basis points year-over-year (or YoY).
Why Unit Growth Is Critical For Panera Bread
Unit growth was critical for Panera Bread’s revenue growth. Panera Bread opened 22 new company-operated restaurants and 13 new franchised restaurants.
McDonald’s Set To Report Latest Earnings
McDonald’s had the largest share of the fast food restaurant industry in 2014 and serves 70 million customers per day—more than the population of France.
Retail Sales Reports From ICSC-Goldman And Johnson Redbook
The ICSC-Goldman and Johnson Redbook indices both report consumer spending data each week, but people consider the ICSC-Goldman index to be more consistent.
Why Chipotle Mexican Grill had strong earnings in 3Q14
Chipotle Mexican Grill’s (CMG) third quarter earnings were released on October 21, 2014. It reported an adjusted EPS of $4.15. It increased by 56%.
Must Know: Analysts’ Price Target for Chipotle Mexican Grill
About 47% of analysts have “buy” recommendations on Chipotle, 50% of analysts have “hold” recommendations, and 3% have “sell” recommendations on the company. Overall, the stock has a “buy” rating.
What Wall Street Recommends for Jack in the Box
As of November 22, 52.9% of the 17 analysts who follow Jack in the Box (JACK) recommend a “buy,” 41.2% recommend a “hold,” and 5.9% recommend a “sell.”
Retirement Investing: Yes, You Can Do It Yourself
Investing for retirement has its own unique characteristics. Your priorities change, and so should your investing strategies.
Why Yum! Brands’ division in China is important
Yum! Brands’ (YUM) division in China includes its business in mainland China. It’s the combined revenues from all the brands—KFC, Pizza Hut, East Dawning, and the Little Sheep.
Shake Shack Management’s Guidance for 2015: Key Takeaways
During the latest earnings call, Shake Shack’s (SHAK) management offered revenue guidance in the range of $159 million to $163 million in 2015.
Must-know: Yum! Brands’ Taco Bell business
Taco Bell opened in 1962. It’s a fast food or quick service restaurant. About 15% of Yum! Brands’ (YUM) total restaurant units were in the Taco Bell division at the end of 2013.
Food Inflation On Meat Eases In November
Food inflation Food cost is one of the important operating costs for a restaurant. In the McDonald’s (MCD) overview series, we learned that food and paper costs can be as much as 34% of sales. Food inflation can cause a restaurant’s operating margins to squeeze, but a restaurant like Chipotle Mexican Grill (CMG) can adjust its […]
Events to Look Forward to in the Consumer Sector This Week
H&R Block (HRB) is set to announce its fiscal Q4 2018 results on June 12 after the market closes.
Analyzing Burger King’s shifting business model focus in 2Q14
Franchise revenues include royalties and franchise fees. Royalties are calculated as a percentage of franchise restaurant revenues, which are driven by same-store sales.
McDonald’s Risks, Strengths, and Weaknesses
The restaurant industry is susceptible to a wide array of risks of macro and micro factors. As a huge global brand, McDonald’s faces several risks.
Starbucks Year-To-Date Returns Soar to 7.5%
The Starbucks year-to-date return was 7.5% compared to an average return of 4.9% among its rivals.
Must-know: Dunkin’s major costs of operations
Dunkin’ Brands Group (DNKN) has three major costs of operations. The costs of operations include general and administrative expenses, cost of products sold, and occupancy expense. Dunkin’s general and administrative expenses accounted for $56 million in the second quarter. This was 30% as a percentage of sales—compared to $62 million, or 34%, as a percentage of sales.
Why Shake Shack Stock Rose after Fourth-Quarter Earnings
Shake Shack (SHAK) posted its fourth-quarter earnings after the market closed on February 25. Before looking at analysts’ reactions, we’ll look at Shake Shack’s fourth-quarter performance and stock performance.
Starbucks’ strategy: Aggressive unit growth
Unit growth is a key driver that Starbucks is aggressively pursuing to grow the company’s sales. In the last 12 months, Starbucks has added 1,599 net new restaurants, or 8% growth in units.
Must-know: McDonald’s pricing and marketing initiatives in 3Q14
During the third quarter, McDonald’s launched its “Our food. Your questions” campaign. It enables communication between McDonald’s and its customers.
Why Yum! Brands wants to grow outside the US
Restaurant companies in the U.S. are facing flat sales. Markets in China and India have experienced double digit growth over the past five years.
Is Shake Shack’s Valuation Still High?
Shake Shack is trading at 3.3 times the average peer valuation, which may mean that the company is overvalued.
Must-know: Investors’ reactions to Wendy’s earnings
Share volume was ~14.4 million shares, compared to the 50-day average daily volume of ~4.7 million, according to NASDAQ. Wendy’s closed 2.2%, up at $8.16. Wall Street analyst consensus estimated an adjusted earnings per share (or EPS) of $0.09.
Why Burger King has long-term initiatives
Management stated that Burger King is on track to change the image of 40% of its stores in the US by the end of 2015. it’s on track to achieve this target.
1 key value metric that affected Panera Bread Company’s earnings
In the last part of this series, we discussed how Panera Bread Company (PNRA) had a disappointing operating income. Let’s see what could have led to this result.