Chipotle Mexican Grill, Inc. (CMG), Fiesta Restaurant Group Inc (FRGI): It’s a Non-Stop Fiesta Owning This Company

This month Yum! Brands, Inc. (NYSE:YUM) reported that net income for the quarter dropped 15%. Same-store sales in China declined 20% in the second quarter. To get traffic back into its Chinese locations, Yum! has had to discount items and heavily advertise. As a result, Yum! is forecasting that same-store sales in China will rebound by the fourth quarter of this year.

In the U.S., Yum! Brands, Inc. (NYSE:YUM) sees the popularity of the fast-casual segment and is looking to capitalize on that growing trend. Yum! has sought to improve its Taco Bell menu to better compete with Chipotle Mexican Grill, Inc. (NYSE:CMG). Yum! has also sought to create a more relaxed atmosphere in both its Taco Bell and KFC locations. Yum! has the footprint to compete; its 39,000 locations and a stronger menu could make a Yum! a stronger competitor in the fast-casual segment.

Foolish assessment

The fast-casual trend is here to stay in the restaurant industry. My favorite is Fiesta Restaurant Group Inc (NASDAQ:FRGI) because of its small presence in the U.S. and tremendous room to grow. My second favorite is Chipotle Mexican Grill, Inc. (NYSE:CMG) because the company continues to defy skeptics and outperform. Lastly, I would pick Yum! Brands, Inc. (NYSE:YUM) because of the company’s problems in China. Yum! also, in my opinion, has not improved its menu enough. I still prefer eating at a Fiesta location or at Chipotle. If Yum! can improve its menu, it would be a much more formidable competitor with its size and scope in the restaurant business.

Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill. The Motley Fool owns shares of Chipotle Mexican Grill.

The article It’s a Non-Stop Fiesta Owning This Company originally appeared on Fool.com.

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