5 US Restaurant Stocks Reported Higher Profits: Can They Continue to Grow?
Singaporeans are well-known for being food lovers.
But when it comes to investments, there are hardly any large, global-scale restaurant operators listed on the Singapore stock exchange.
The business of food can be very lucrative if you have a strong brand franchise, great products and a good expansion strategy.
That’s why investors can turn to the US to search for fast-growing restaurant stocks that can give you a bang for your buck.
We look at five restaurant stocks that recently reported higher profits.
These are reputable names with growing operations that could make it into your buy watchlist.
Domino’s Pizza (NYSE: DPZ)
Domino’s touts itself as being “the largest pizza company in the world”, and has a portfolio of more than 20,000 stores located in more than 90 markets.
For the first quarter of 2023 (1Q 2023), the company saw its revenue inch up 1.3% year on year to US$1.02 billion.
Operating profit rose 7.9% year on year to US$177.5 million while net profit climbed 15.2% year on year to US$104.8 million.
The directors also declared a quarterly dividend of US$1.21 per share.
Domino’s reported that its US stores enjoyed same-store-sales growth of 3.6% for the quarter while international stores saw a smaller but still-positive 1.2% growth.
The company also opened 168 stores during 1Q 2023 and shut 40 for a net store opening of 128., bringing the total stores as of 26 March to 20,008.
CEO Russell Weiner remains optimistic about the pizza company’s future as the business plans to increase its pace of innovation.
Restaurant Brands International (NYSE: QSR)
Restaurant Brands International, or RBI, is one of the world’s largest quick-service restaurant chains with around 30,000 restaurants in over 100 countries.
RBI owns famous fast-food chains such as Burger King, Tim Hortons, and Popeyes.
For 1Q 2023, RBI reported a 9.6% year on year jump in revenue to US$1.59 billion.
Operating profit dipped slightly year on year but net profit edged up 3.3% year on year to US$189 million.
The company also generated a free cash flow of US$77 million for the quarter.
Consolidated comparable store sales improved by 10.3% year on year.
RBI ended 1Q 2023 with 18,911 Burger King stores, 465 more than the same period last year.
Tim Hortons saw its store count increase by 300 over the same period to 5,620.
Burger King will be investing US$400 million in total to fund its “Reclaim the Flame” campaign to accelerate sales growth and increase franchisee profitability.
Part of this amount (US$150 million) will go towards advertising and digital investments while the remainder is for restaurant remodelling, kitchen equipment, and building enhancements.
McDonald’s Corporation (NYSE: MCD)
McDonald’s is a leading fast-food retailer with more than 40,000 stores in over 100 countries.
Revenue for 1Q 2023 rose 4% year on year to US$5.9 billion.
Operating profit improved by 10% year on year to US$2.5 billion while net profit surged 63% year on year to US$1.8 billion.
Global comparable store sales increased by 12.6% year on year, with President and CEO Chris Kempczinski commenting that customer demand for the brand remains strong.
Chipotle Mexican Grill (NYSE: CMG)
Chipotle Mexican Grill, or CMG, serves up Mexican food in over 3,200 restaurants in the US, Canada, the UK, France and Germany.
The company reported a stellar set of earnings for 1Q 2023 as revenue increased 17.2% year on year to US$2.4 billion.
Operating profit soared 93.3% year on year to US$367.6 million with net profit increasing by 84.2% year on year to US$291.6 million.
Free cash flow for the quarter jumped 79.2% year on year to US$334.7 million.
Comparable restaurant sales registered a strong 10.9% year on year, and CMG opened 41 new restaurants during the quarter.
For 2023, management is targeting to open between 255 and 285 new restaurants which should help to sustain its growth trajectory moving forward.
Wingstop (NASDAQ: WING)
Wingstop serves up Western fare such as chicken wings, tenders and sandwiches and operates and franchises more than 1,950 locations worldwide.
Total revenue for 1Q 2023 climbed 42.7% year on year to US$108.7 million, with domestic same-store sales increasing by 20.1% year on year.
Operating profit climbed 54.6% year on year to US$25.7 million while net profit jumped 80.6% year on year to US$15.7 million.
For 1Q 2023, Wingstop saw 37 net store openings and also declared a quarterly dividend of US$0.19 per share.
Management has provided encouraging guidance for 2023, with high-single-digit domestic same-store sales growth along with the opening of 240 stores globally.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
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