Headwinds from labor shortages and rising wages have prompted fast food chains to turn to innovative solutions to increase their profits. The future of fast food chains is changing, as restaurants experiment with automated technology such as robots that flip burgers and AI software that can take drive-by orders to make the operation more efficient and profitable.
According to projections by restaurant consulting firm Aaron Allen & Associates, up to 82% of restaurant jobs could be replaced, to some degree, by robots. It is estimated that automation could save fast food restaurants in the United States More than $12 billion in annual wages.
Thanks to inelastic demand, the fast food sector acts as a hedge against inflation and recession. The need for affordable and convenient food fueled the growth of the industry and made it recession-proof. The global fast food market is expected to increase from USD 972.74 billion in 2021 to USD 1.47 trillion by 2028. at a compound annual growth rate of 6.1%.
With Economists expect a recession This year, investors may be wise to add shares of primarily strong fast food corporation McDonald’s Corporation (mcd) and the Brands International Inc. restaurant. (QSR) to their watch list.
McDonald’s Corporation (mcd)
A world-famous fast food franchise, MCD operates restaurants known for their hamburgers, cheeseburgers, chicken sandwiches, nuggets, wraps, and fries, among other things.
On December 15, 2022, MCD and all five members of the Restaurant Chain North American Logistics Council (NALC) signed agreements with Enel North America to purchase renewable energy and associated Renewable Energy Certificates (RECs) from Enel Green Power’s Blue Jay solar project. This would help MCD achieve its sustainability goals.
“This transaction is a unique example of how McDonald’s and its logistics partners can join forces to leverage their reach and scale to address supply chain emissions together,” said Bob Stewart, senior vice president and CEO, North America Supply Chain, at MCD. “We are excited about our collective capabilities to help tackle supply chain emissions together.” Climate change and drive continuous improvement.”
Muscat Company revenues for the nine months ending September 30, 2022 increased marginally year-on-year to $17.26 billion. The company’s non-GAAP net income rose 5.3% year-over-year to $5.58 billion. Additionally, it is non-GAAP EPS It came in at $7.51, which is a 6.5% increase over the prior year quarter.
Analysts expect MCD’s earnings per share for fiscal year 2022 to rise 7.3% year-over-year to $9.95. Its revenue for the fiscal year 2023 is expected to increase by 3.2% year-on-year to reach $23.75 billion.
It has an impressive earnings history, beating compiled EPS estimates in three of the subsequent four quarters. The stock rose 7.6% over the past nine months, closing the last trading session at $269.29.
MCD’s strong fundamentals are reflected in its profile POWER Ratings. The stock has an overall rating of B, equivalent to Buy in our rating system. POWR Ratings rates stocks on 118 different factors, each with its own weighting.
In category B Restaurants industry, it is ranked #16 out of 46 stocks. It has an A for quality and a B for stability and feel.
In all, we assessed MCD at eight different levels. In addition to what we mentioned above, we also provided MCD scores for growth, value, and momentum. Get all MCD reviews here.
Brands International Inc. Restaurant (QSR)
Headquartered in Toronto, Canada, QSR operates as a worldwide quick service restaurant company. It operates through four divisions: Tim Hortons; burger king; Popeyes Louisiana Kitchen. and Firehouse Subs.
On December 21, 2022, Popeyes, a subsidiary of Qatar Research Center and Centras Group, announced plans to develop and open dozens of Popeyes restaurants across Kazakhstan in the coming years. It is expected to be a gateway for Popeyes into Central Asia and open up new expansion opportunities for the brand.
For the third fiscal quarter (ending September 30, 2022), total QSR revenue increased 15.5% year-over-year to $1.73 billion. The company’s adjusted net income increased 23.5% year over year to $436 million. Moreover, its adjusted EBITDA rose 5.8% year-over-year to $642 million, while adjusted earnings per share was $0.96, which is up 26.3% from the year-ago period.
QSR revenue for the quarter ended December 31, 2022 is expected to increase 8.1% year-over-year to $1.67 billion. Earnings per share for the quarter ended March 31, 2023 is expected to increase marginally year-over-year to $0.64.
It has a surprisingly commendable earnings history, beating compiled EPS estimates in each of the four subsequent quarters. The stock rose 28.4% over the past six months, closing the last trading session at $66.89.
The QRC’s POWR ratings reflect its strong outlook. The company has an overall rating of B, which is equivalent to a Buy in our rating system. It ranks No. 8 in the same industry. Additionally, it has a B score in stability, feel, and quality.
click here See other QSR reviews for growth, value and momentum.
MCD shares were trading at $268.48 a share on Tuesday afternoon, down $0.81 (-0.30%). Year-to-date, MCD has gained 1.88%, versus a 4.73% gain in the benchmark S&P 500 over the same period.
About the author: Malika Alphonsus
Malika’s passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in economics and psychology, she intends to help investors make informed investment decisions. more…
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