The pandemic has left a long-lasting impact on the restaurant industry. From a complete lockdown to social distancing norms, reduced business operations have led to a $120 billion loss in sales in the first three months of the pandemic, according to the National Restaurant Association (NRA). However, in order to support the recovery of this sector, the NRA has requested low-interest loans and subsidies, as well as reduced taxes from central and state governments. This, combined with an efficient delivery system and drive-thru service, can help the industry recover from pandemic-led losses.
However, fast food restaurants have fared well during this pandemic…
as these food chains already have a well-established delivery and drive-thru system. Fast food consumption has relatively increased over the past couple of months, as people are substituting dining in restaurants with take away from fast food chains. As coronavirus is not food-borne, eating take-out has become popular across the country.
Companies such as McDonald’s Corporation (MCD – Get Rating), Chipotle Mexican Grill, Inc. (CMG – Get Rating), Domino’s Pizza, Inc. (DPZ – Get Rating), and Dunkin’ Brands Group, Inc. (DNKN – Get Rating) have generated profits in the last reported quarters, despite weakness in the industry. Many of them have also expanded their business by opening new franchise restaurants across the country and internationally. As the risk of catching the virus is increasing with each day, the popularity and thereby revenue and earnings of these companies are expected to increase over the upcoming months.
McDonald’s Corporation (MCD – Get Rating)
MCD is one of the most popular fast-food joints in the world, operating through the following segments — United States, International Lead markets, High Growth markets, foundational markets, and corporate.
MCD recently entered a partnership with zero-waste platform Loop to establish reusable packages in the United Kingdom. MCD is the first company in the fast-food industry to pilot reusable packaging to minimize environmental pollution.
As of June 30th, 99% of MCD restaurants in the United States are fully operational, while 94% of the international stores are now open. However, the decline in seating capacity amid the social distancing norms have adversely affected second quarter results.
Despite the pandemic driven business constraints, MCD generated $3.76 billion in revenues and $483.80 million in net income in the second quarter that ended in June 2020. MCD’s EPS is expected to grow at 3.9% per year over the next five years.
MCD has gained more than 80% since hitting its 52-week low of $124.23 in March. The stock hit its 52-week high of $226.72 in September.
How does MCD stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating.
You can’t ask for better. It is also ranked #1 out of 49 stocks in the Restaurants industry.
Chipotle Mexican Grill, Inc. (CMG – Get Rating)
Headquartered in the United States, CMG is a Mexican fast-food restaurant chain operating in North American and European countries. CMG restaurants can be classified as: at the end of a line retail outlets (end-caps), in a line retail outlet (in-lines), free standing, and other.
CMG introduced its drive-thru facility Chipotlane in 11 of the new restaurants opened in 2020. Out of its estimated new employee hiring of 10,000 this year, CMG has already appointed 8,000. Moreover, CMG recently launched a new avocado dyed clothing and accessories line, with first access given to 15 million Chipotle Rewards members.
CMG’s second-quarter results were impressive. Digital revenue
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