DJ Here's Why McDonald's, Wendy's and Starbucks Stand Out in Fast Food -- Barrons.com
By Teresa Rivas
September has been a rocky month for the stock market, and it has also been choppy for fast-food restaurants, notes Stifel. Once again, however, McDonald's stands out from the pack, thanks to menu innovation, it says.
McDonald's stock (ticker: MCD) is up more than 11% in 2020, easily outpacing the S&P 500 and many of its quick-service peers. The restaurant's store traffic has been particularly strong in September thanks to its limited-time Travis Scott meal deal, which highlights the rapper's favorite order. Stifel's Chris O'Cull thinks the collaboration may have allowed McDonald's to grab market share.
"While results have tapered since the initial week, traffic levels remain meaningfully above July and August levels," he writes, and this boost "has coincided with declines at competitors Jack in the Box (JACK) and [ Yum Brand's (YUM)] Taco Bell."
His data show that McDonald's September traffic is down to just under 25% year over year, a meaningful improvement from the more than 30% declines it notched in July and August because of the pandemic.
New menu items are also helping Wendy's (WEN), he writes. The company faced difficult year-over-year comparisons, given 2019's introduction of spicy chicken nuggets, but the new Pretzel Bacon Pub Burger and Bacon Pub Fries, along with promotions, appear to be helping traffic continue to recover from lows earlier this year.
These aren't the only fast-food firm seeing success. O'Cull notes that an "encouraging...pumpkin spice latte season" is helping Starbucks (SBUX). Starbucks' shares have slipped nearly 3% in 2020, as disrupted morning commutes have meant fewer store visits. Mobile phone data appear to show that trips to Starbucks remain strong this month, continuing August's meaningful acceleration from July levels.
O'Cull isn't the only analyst to point to the power of pumpkin spice, but he writes that Starbucks' "sustained performance is made all the more impressive considering September 2019's visitation was roughly 7% higher than August's, implying Starbucks is capturing a meaningful amount of the Pumpkin Spice Latte-driven traffic."
McDonald's shares were up 1.6% to $221.63 Monday afternoon, while Wendy's was 3.2% higher to $22.03, and Starbucks was up 1.9% to $85.93. The Dow Jones Industrial Average was up 1.9%.
Write to Teresa Rivas at teresa.rivas@barrons.com
(END) Dow Jones Newswires
September 28, 2020 14:43 ET (18:43 GMT)
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