Add in the small-cap overlay, and that growth profile is often enhanced. That said, PBJ does allocate over a quarter of its weight to consumer discretionary stocks, the sector where restaurant names reside. Yum! 2020 InvestorPlace Media, LLC. The fund holds 30 stocks, 11 of which are restaurant fare. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. The stock table includes relevant common stocks… The dividend giant's robust cash flows, meanwhile, give management the means to invest heavily in maintaining its leadership position through store upgrades and new functionality like kiosks, mobile ordering, and home delivery. And while there are always risks involved when investing in stocks, the strong track records of the above businesses illustrate how protected they can be from normal market swings. Together, these chains account for 48,000 locations around the world. Francfort says Chipotle is one of the best high-growth restaurant options for those with a long-term investing strategy. With those challenges in mind, let's take a look at the fast-food stocks that dominate U.S. public markets today, as ranked by market capitalization, or the total number of a company's shares outstanding multiplied by the stock's market price. 1125 N. Charles St, Baltimore, MD 21201. Its brands have a long history in China, having first entered the market in 1987. MILN touches a broad range of sectors and themes that millennials are driving, including “social media and entertainment, food and dining, clothing and apparel, health and fitness, travel and mobility, education and employment, housing and home goods, and financial services,” according to Global X. MILN may not be the restaurant ETF some investors are hoping for, but it is a nifty, tactical play on a burgeoning demographic that’s growing its wealth and spending power. What that means is that PEJ status as a restaurant ETF is fluid. Market data powered by FactSet and Web Financial Group. Beyond Meat stock is on the rise. Will your money be safe? What is interesting about the current lineup of industry ETFs is that there are no dedicated restaurant ETFs. Find a fast-food company that delivers on these characteristics of competitive strength, solid finances, and a good management team, and you're in a great position to earn positive long-term returns from investing in this high-growth industry. While that's achievable, how quickly the expansion happens will depend on broader economic growth trends in the country. It has taken the company several years, lots of cash, and turnover at the highest ranks to recover from that stumble. Restaurants Stocks . That's tantalizing growth, but there are also a few major areas of concern for investors. Finally, following along with management's regular comments to shareholders can be a great way to gain an understanding of the business while getting a feel for how well actual results tend to sync up with the projections of a management team. But Dunkin' faces serious challenges in moving to extend its brand beyond the Northeastern U.S. region that has traditionally been its base. The restaurant sector includes companies that offer full-service restaurants, fast food restaurants, cafeterias and snack bars. About 56% of Americans go out to eat or have food delivered two to three times a week. Chipotle (NYSE: CMG) is the first of our restaurant stocks to buy. McDonald’s (NYSE:MCD) fell as low as $124.23 recently only to bounce back sharply.The fast-food chain will … Chipotle grew to prominence by disrupting the fast-food industry. However, PBJ is a little bit less of a restaurant ETF. Starbucks ( SBUX , $58) is a good example. Copyright © That diversity has served investors well over the years. Entrenched operators, especially Starbucks, have held dominant positions in key markets like California for years, and Dunkin' doesn't enjoy the same brand awareness there as it does in states like Massachusetts, where it is headquartered. If growth is your focus, stick to companies like Domino's that are still adding restaurants at an accelerated clip. Starbucks (NASDAQ:SBUX) recently hit record highs and Chipotle Mexican Grill (NYSE:CMG) has regained its growth story status. JAB owns sizeable shares in brand names across a diverse range of businesses, but their investments in food include American fast-casual restaurant chains such as Panera Bread, Au Bon Pain, Einstein Brothers Bagels, Insomnia Cookies, Peet’s Coffee… The burger giant has been a staple for decades. ETFs or not, some restaurant stocks, broadly speaking, are soaring. Brands (NYSE:YUM), among others. More than 10 of PSCD’s 97 holdings are restaurant stocks, reflecting the small-cap status of many of dining names. That’s pretty impressive. Denny’s (DENN) The restaurant chain bills itself as “America’s Diner” and many of its regular … The securities listed in this page are organized into two tables. Investors interested in the fast-food industry wouldn't be limiting themselves by focusing on just these top stocks. The following is a list of some of the restaurant stocks highlighted by three pros as benefiting from a very supportive environment over … The company counted just 74 locations in that base in mid-2019, up 48% from a year earlier. Yes, there’s plenty of controversy surrounding fast food companies, but there’s also ample credibility in the restaurant investment niche. List of fast food restaurant chains. These include menu innovation, aggressive value-based promotions, and an active social media presence. Many restaurant stocks are down steeply from their levels just a couple of weeks ago. The burger giant's massive size is normally a key advantage, but size proved a challenge as it struggled to react to major changes in consumer tastes around natural ingredients in recent years. All rights reserved. McDonald's accounts for roughly 7% of all annual fast-food sales, but that's not where the company earns most of its money. In fact, shares have skyrocketed more than 60% in the first three weeks of 2020. The experiential element of millennial proclivities could bode well for restaurant shares going forward and GENY has more of a global kicker than the rival millennials ETF. Any restaurant on the stock market. Demitri covers consumer goods and media companies for Fool.com, as well as broader moves in the economy. This includes full-service restaurants, fast-food restaurants… There are dozens of upon dozens of industry exchange traded funds (ETFs) on the market today. CEO Todd Penegor and his team have achieved modest success, as these initiatives keep Wendy's sales growing at existing locations while the restaurant base expands as well. “We believe that the companies that effectively cater to Millennials’ predilections will penetrate a consumer base of 90-million strong and therefore are more likely to outperform the broad market over the long term,” according to Nasdaq. Second, because it’s a small-cap fund, Amazon.com (NASDAQ:AMZN), the king of large-cap consumer cyclical stocks, doesn’t reside in this fund, creating a performance gap relative to large-cap competitors. Yet investors have celebrated the business's steady rebound over the past few years and are optimistic that Chipotle can grow quickly as more of the industry shifts toward home delivery. Restaurant stocks in this fund include Chipotle, McDonald’s and Starbucks as well as Yum! The Los Angeles-based company is enjoying a market spike due to the recent push for more plant-based meat substitutes by restaurant chains. Chipotle grew to prominence by disrupting the fast-food industry. That success should allow it to remain a major industry player, particularly as competition moves into China. See you at the top! It also relies on Yum China holding off rival fast-food giants -- all of which see the market as critical to their global ambitions. Its Popeyes restaurant concept competes head to head with KFC in many markets, in fact, and the fast-food giant also runs thousands of Burger King locations that battle with McDonald's for market share. Yet the chain has outpaced these competitors for years, using a mix of marketing savvy and technical innovations like its "hot-spot" program that allows for quick delivery to thousands of nontraditional addresses like parks and beaches. All rights reserved. Let's conquer your financial goals together...faster. The chain parlayed those advantages into a store base that today maintains over 2,400 locations, mainly in the United States. Expense ratio: 0.63% per year, or $63 on a $10,000 investment. Many restaurant chains in the U.S. are traded publicly either on the Nasdaq Stock Market or the New York Stock Exchange. The formula was a massive hit with consumers and helped support a more than 150-fold increase in the chain's stock price in the 25 years following its 1992 initial public offering. As such, six of the fund’s seven consumer cyclical holdings are dining out names, giving PBJ some chops as a restaurant ETF. Five restaurant chains plunging in value. That's a likely scenario, given that Yum! 5. quotes delayed at least 15 minutes, all others at least 20 minutes. The GlobalX Millennials Thematic ETF (NASDAQ:MILN) is a stretch as restaurant ETF as just 5.30% of its weight is allocated to the industry and about 60% of that exposure is devoted to a single stock — Starbucks — but there are some other reasons to consider MILN. Known for its all-day breakfast, Denny’s faces an 11.9% chance of defaulting. Brands has a firm hold in three of the biggest fast-food niches. A typical national chain that sells burgers, pizza, or chicken usually has an easy-to-follow business with healthy profit margins. Net Income (TTM): $0.5 billion. However, Restaurant Brands International has demonstrated a knack for elevating the fast-food dining experience in recent years, and that asset should serve it well as it targets its next round of global expansion. The first is that Shake Shack hasn't been enjoying booming growth at its existing locations. What defines a restaurant chain? Yum China is the largest restaurant operator in the world's second-biggest economy, with more than 8,400 locations in the country. There are some risks with PSCD. A foundational aspect of that initiative is its espresso-based coffee rollout that seeks to establish the fast-food specialist as a premium caffeinated drink provider. “They [Millennials] communicate heavily on social media platforms, consume hours of digital content per day, are physically very mobile, prefer to shop online rather than in stores, tend to be more health-focused than members of other generations, and prefer experiences over physical goods,” says Nasdaq. Today, Starbucks operates more than 17,000 locations, with the U.S. and China being its two biggest markets. Their recent successes with the Burger King and Popeyes brands, at the same time, suggest they can expand into places like China, Spain, and Thailand to significantly improve on their current base of 26,000 restaurants. Dunkin' Brands operates 21,000 restaurants through its Dunkin' and Baskin-Robbins brands situated in the U.S. and across key international markets. Chains are popular for a reason. The burrito specialist brought restaurant-quality ingredients and preparation methods to the niche, and its assembly-line approach allowed it to serve record numbers of hungry customers -- over 200 an hour at peak lunchtimes. Brands company spun off its China holdings into a separate public business. Steady growth in KFC and Taco Bell more than made up for the pizza losses in fiscal 2018. CEO Jose Cil and his team have aspirations to establish Tim Hortons more firmly in the U.S. market over the next few years. In terms of number components, the Invesco S&P SmallCap Consumer Discretionary ETF (NASDAQ: PSCD) is a realistic alternative to a true restaurant ETF. That group includes the aforementioned Chipotle, McDonald’s and Starbucks as well as several other fast food and fast casual names. Market capitalization: Restaurant stocks vary wildly in size, with market capitalization, or overall value, depending on factors like global store footprint and earnings power. In particular, it has helped keep overall sales and earnings rising even though the Pizza Hut chain has lost ground against delivery-focused rivals like Domino's. It has a similar attraction in offering low-priced food at convenient locations. Pizza Hut is second at $12 billion of annual revenue, and Taco Bell clocks in at just under $11 billion. None of that will matter to investors if Shake Shack delivers on its promise of taking the better-burger concept to a wider audience in the way Chipotle did with its premium take on burritos. This is especially true for full-service chains, which are expected to bear the brunt of the sales problems. Meanwhile, profit margins still haven't approached their 2015 highs as of mid-2019. The pizza delivery specialist increased its market share in each of those fiscal years while expanding its store base at a robust clip. Yum China Holdings, Inc. (YUMC) Revenue (TTM): $8.0 billion. Chipotle's food safety scare, starting in 2015, demonstrated a key risk of investing in this industry, as customers abandoned the brand in droves following news of foodborne illnesses spreading from several of its locations. Stores outside of this dense metropolitan area are booking far lower volumes, and so it's likely that the wider business will see lower profit margins as it matures. Any restaurant with Corporate Regulatory Structures. By some estimates, a third of all Americans indulge in fast food everyday. This track record translated into impressive returns for shareholders as annual sales soared to $3.4 billion from $1.4 billion in 2018. McDonald's: the name that started it all. Rivals are always seeking to chip away at an industry leader's market share with new products and lower prices. It was born in 2016, in fact, when the larger Yum! Sales Growth: 33% Total Unit Growth: 23% Estimated Sales Per Unit (ESPU) Growth: … Article printed from InvestorPlace Media, https://investorplace.com/2019/09/restaurant-etfs-are-hard-to-find-but-these-funds-will-do/. Stock Advisor launched in February of 2002. Recipe Unlimited owns and operates casual dining chains like East Side Mario’s, Kelsey’s, Montana’s, and The Keg. Restaurant Brands International is the owner of three major chains and in that way earns frequent comparisons with rival Yum! Due to the dearth of true restaurant ETFs, some stretching is necessary here. It also helps that Domino's small store footprint makes it an ultra-efficient business. Its Tim Hortons brand, meanwhile, is the largest donut-and-coffee chain in Canada and fights for coffee fans against Starbucks. That growth will require strong execution across new markets with diverse taste preferences. The fresh-fast burrito giant already maintained a loyal base of customers, and many of those also versed in the ease of … Each has the potential to produce acceptable or even market-thumping returns. 1125 N. Charles St, Baltimore, MD 21201. Data support the restaurant stock these. Perhaps surprisingly, PSCD’s allocations to growth and value stocks are nearly even. Few fast-food companies can claim anything approaching the growth that Domino's had in the decade ending in 2018. When choosing a fast-food stock to buy, consider its competitive assets such as industry position, scale, and brand power. Executives have big plans to more than double the company's store footprint to 20,000 locations over the next decade or so, and this aggressive target should be supported by a continued move toward higher incomes and more discretionary spending in China. The second worry is that Shake Shack's profitability is declining as it expands outside of its traditional geographic focus around New York City. Starbucks' success in the premium coffee niche attracted many competitors, including McDonald's and Dunkin' Brands. Fast-food businesses are investor favorites. Like its main rivals, Burger King and McDonald's, the chain sells a range of staple products like its "never-frozen" burgers, Frosty ice cream desserts, chili, and chicken sandwiches, along with seasonal or limited-time offers. But Starbucks has a knack for adjusting itself to the latest tastes while driving the industry forward through drink innovations and specialty products. Restaurant Stocks: McDonald's (MCD) Source: 8th.creator / Shutterstock.com. Millions of People Will Be Blindsided in 2021. The Invesco Dynamic Food & Beverage ETF (NYSEARCA:PBJ) is very similar to the aforementioned PEJ. Restaurant stocks to watch today. Executives hope to pair successes there with a growing store base that keeps rivals out of most of its neighborhoods by making carryout a breeze and by giving Domino's one of the most efficient delivery infrastructures of any company. And the best fast-food stocks enjoy huge market potentials thanks to some basic and enduring consumer preferences around taste, value, and convenience. Restaurant chains all over the world have closed their doors in recent weeks, serving only drive-through or delivery customers. GENY, which follows the Nasdaq Global Millennial Opportunity Index, allocates about half its weight to ex-US stocks while MILN mainly a domestic fund. Brands is aiming to reinvigorate the Pizza Hut brand by attacking the delivery segment more aggressively. Copyright © 2020 InvestorPlace Media, LLC. 5 Restaurant ETFs to Sink Your Teeth Into, They [Millennials] communicate heavily on social media platforms, consume hours of digital content per day, are physically very mobile, prefer to shop online rather than in stores, tend to be more health-focused than members of other generations, and prefer experiences over physical goods,” says, 8 Next Energy Solutions as We Pass Peak Oil, Fisker Stock Has the Potential for Big Future Gains, Louis Navellier and the InvestorPlace Research Staff, Stock Market Live Updates Monday: Reopening Plays Are on the Move, A Tidal Wave of Cash Is About to Hit the Markets, Top SPAC Merger News This Week: Canoo, XL Fleet, Microvast and 10 More Hot SPACs, 8 Battery Stocks That Electric Vehicle Companies Rely On, The 10 Most Reliable Value Stocks to Buy for 2021, 7 Cheap Stocks to Buy Before the Market Realizes their Worth. 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