Wednesday, August 12, 2009

Another take on fast food

Another take on fast food:

Fast Food Restaurants Have Right Menu for Recession

Main points:

- "quick-service operators such as McDonald’s (MCD), Burger King (BKC) and Wendy’s (WEN) may enjoy a comparative advantage that helps them navigate the weakness better than their competitors in the casual-dining and higher-end segments, according to Moody’s Investors Service".

- "A recent analysis by restaurant industry consultant John Gordon showed a mixed picture for fast food restaurants, with McDonald’s, Chipotle (CMG) and Steak N Shake (SNS) faring better than Yum Brands (YUM) and than Darden’s (DRI) Red Lobster and Olive Garden. All were faring much better than fine dining , where sales are down some 15% from a year earlier".

Given that Jim Cramer is recommending Wendy's, I guess I will take a contrarian view and suggest that MCD and YUM have greater room for an upswing.

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