McDonald’s has historically been the leader in selling a cheap burger and preparing it quickly. There’s no shortage of competition these days and those competitors seem to have closed the value gap, leaving McDonald’s in a tricky situation where it needs to fight hard to maintain its leadership. Will shareholders be smiling, or is the iconic Grimace mascot more appropriate?
Darden Restaurants is a full-service restaurant group, which means they are scaling a business model that doesn’t like to scale. This gives them plenty of runway for growth in a fragmented market, but it means that nothing comes easily. Still, through a combination of organic growth and acquisitions, the business has pulled off decent returns. Does pressure in the restaurant industry offer an attractive entry point, or is this wise to avoid for now?
There are 40,800 McDonald’s restaurants in the world - that’s a lot of Big Macs! Every quarter, there are more golden arches in the world helping people forget their problems with a strong dose of calories. At group level, McDonald’s is a marketing and product design company, rolling out ideas and learnings to a footprint that is heavily skewed towards franchise stores. With a long-term share price performance that beats the S&P500, it’s a strategy that works... but is it worth a buy at current levels?
Use the podcast player below to listen to our discussion on Yum! Brands and its Q4'22 result, which accompanies the detailed write-up below: (Date of report: 16 February 2023) There’s an exclamation mark in Yum! and with good reason, as this is the world’s largest restaurant company with over 55,000 venues across various brands where you can get your calorie fix. With a footprint in 156 countries and 98% of the restaurants belonging to franchisees, this is fast food at scale. Clearly, a lot has happened in the 25 years since Yum! was spun-off by PepsiCo. At that time, Yum! was [...]
Use the podcast player below to listen to our discussion on Sysco and its Q4’22 result, which accompanies the detailed write-up below: (Date of report: 17 August 2022) Sysco is a company you’ve likely never heard of unless you have friends in the restaurant industry in the US. This is effectively the Bidcorp equivalent in America, delivered at grand scale and with a powerful track record of value creation. It’s rare to see an executive team talking about repositioning for growth while maintaining dividend aristocrat status. That tells you most of what you need to know about Sysco’s business. To whet [...]
Use the podcast player below to listen to our discussion on Starbucks and its Q1’22 result, which accompanies the detailed write-up below: (Date of report: 23 March 2022) Americans are really good at building global brands. There are coffee shops everywhere in the world, yet Starbucks is the only truly global coffee brand that is recognisable in all major countries. Thanks to deals with the likes of Nestle and PepsiCo, you'll also find the brand at your local grocery store. But it's not just the coffee that is brewing at Starbucks. There's a labour problem brewing as well, with the risk [...]
Burgers and fairy tales. These are the things that people like to invest in. No, really. In this episode of Magic Markets, we take a step back and discuss two investment themes that we find interesting. The first is the quick-service restaurant (QSR) industry, which commands premium valuations in markets across the world. There are global giants and regional powerhouses, with examples on the JSE as well as in international markets. We discuss the different types of models followed, along with concepts like franchise vs. corporate-owned models and the benefits of each strategy. We then move on to the art of [...]
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