The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Yum! Brands (NYSE: YUM) and the rest of the traditional fast food stocks fared in Q1.
Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
The 14 traditional fast food stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Yum! Brands (NYSE: YUM)
Spun off as an independent company from PepsiCo, Yum! Brands (NYSE: YUM) is a multinational corporation that owns KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill.
Yum! Brands reported revenues of $1.79 billion, up 11.8% year on year. This print fell short of analysts’ expectations by 2.6%. Overall, it was a slower quarter for the company with a miss of analysts’ EBITDA estimates.
Interestingly, the stock is up 1.2% since reporting and currently trades at $149.30.
Is now the time to buy Yum! Brands? Access our full analysis of the earnings results here, it’s free.
Best Q1: Dutch Bros (NYSE: BROS)
Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE: BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.
Dutch Bros reported revenues of $355.2 million, up 29.1% year on year, outperforming analysts’ expectations by 3%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ EPS estimates.
Dutch Bros delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 17.7% since reporting. It currently trades at $69.55.
Is now the time to buy Dutch Bros? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Arcos Dorados (NYSE: ARCO)
Translating to “Golden Arches” in Spanish, Arcos Dorados (NYSE: ARCO) is the master franchisee of the McDonald's brand in Latin America and the Caribbean, responsible for its operations and growth in over 20 countries.
Arcos Dorados reported revenues of $1.08 billion, flat year on year, falling short of analysts’ expectations by 3.6%. It was a disappointing quarter as it posted a significant miss of analysts’ same-store sales and EPS estimates.
As expected, the stock is down 9.9% since the results and currently trades at $7.35.
Read our full analysis of Arcos Dorados’s results here.
Starbucks (NASDAQ: SBUX)
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Starbucks reported revenues of $8.76 billion, up 2.3% year on year. This result came in 0.6% below analysts' expectations. Overall, it was a softer quarter as it also produced a significant miss of analysts’ EBITDA and EPS estimates.
The stock is flat since reporting and currently trades at $84.18.
Read our full, actionable report on Starbucks here, it’s free.
McDonald's (NYSE: MCD)
With nicknames spanning Mickey D's in the U.S. to Makku in Japan, McDonald’s (NYSE: MCD) is a fast-food behemoth known for its convenience and broken ice cream machines.
McDonald's reported revenues of $5.96 billion, down 3.5% year on year. This number lagged analysts' expectations by 2.7%. It was a softer quarter as it also logged a slight miss of analysts’ same-store sales and EBITDA estimates.
The stock is down 2.2% since reporting and currently trades at $312.49.
Read our full, actionable report on McDonald's here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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