Burger King opened its first restaurant in Cape Town in May, and is looking to open outlets in other countries in Africa. Investors may want to consider fast-food chains with focused growth plans looking to get a bigger piece of the fast-food burger. Overseas expansion is another corner on the char-broiled grill to go after when the domestic market’s becoming over-saturated.
Burger King Worldwide Inc (NYSE:BKW) is also engaged in home delivery. It’s expanding its “BK® Delivers” program. Petru Pusta, Director, Retail Innovation, Burger King Worldwide, noted recently, “BK® Delivers is already performing well in New York, Miami, Houston, Los Angeles, Chicago, San FranciscoBay Area and greater Washington, D.C. As its popularity has grown, we have seen an increasing demand for the program in other markets.
Up next for the Company is Phoenix and Denver.
Yum! Brands, Inc. (NYSE:YUM) (Taco Bell, Pizza Hut, KFC) is being aggressive in the Chinese market. The company’s initiatives include further expansion in the country.
However, as The Wall Street Journal recently reported, everything’s not exactly yummy there right now for the company. A June 11, 2013, article by Annie Gasparro noted that “same-store sales in China fell an estimated 19% in May, as KFC continues to suffer from the lingering impact of a bird flu scare and quality issues with some of its chicken suppliers.“
For Yum! Brands, Inc. (NYSE:YUM) that’s a double whammy. It’s something investors need to consider with investments in food companies. There’s always the threat of consumer-backlash when they feel uncertain about the food they want to purchase. Constant monitoring of suppliers and continued vigilance as pertains to food safety must be part of the DNA of fast-food restaurant chains.
Additionally, Yum! is entering the Mongolian market. They’re doing what Burger King’s doing – being more aggressive internationally. The company’s intention is to open, within the next five years, 15 outlets in the nation. It recently opened its first in this initiative. Again, investors should consider well-thought out expansion initiatives of companies in emerging markets. It’s often an avenue for fast revenue growth.
The takeaway for investors in all this is that the fast-food chains typically read prevailing winds in their sector very well. The above three ride out economic downturns because they consistently modify their programs to adjust to changing consumer tastes and the opportunities presented to them in global markets. This, more often than not, provides stable, consistent returns for shareholders.
Michael Ugulini has a long position in McDonald’s Corporation (NYSE:MCD). The Motley Fool recommends Burger King Worldwide and McDonald’s. The Motley Fool owns shares of McDonald’s. Michael is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Why These Stocks Will Be Hot for Investors for Years to Come originally appeared on Fool.com and is written by Michael Ugulini.
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