No. 2: Ethnic backgrounds can also give investors clues as to which fast-food restaurants are most likely to succeed. Clearly, we as a society would love to eat fast food that’s healthier for us, but few of us, based on the data in the preceding table, are really willing to make the conscious effort to do so. To that end, creating foods that cater to certain cultures is bound to drive business.
My example here would be Chipotle Mexican Grill, Inc. (NYSE:CMG), which looks as if it could be a strong performer with 53% of Hispanics stating that they eat fast food weekly. Built upon a fresh-Mex theme, Chipotle Mexican Grill, Inc. (NYSE:CMG) offers Hispanics a menu of items that would be very appealing and comforting to their palates while also taking the pledge to use local and organic products, as well as meats that are free of antibiotics and hormones. Thus Chipotle Mexican Grill, Inc. (NYSE:CMG) offers the prospects of growing sales by targeting a demographic that tends to frequent fast-food establishments more often, but it also does this through a socially acceptable manner of utilizing healthier food options than its competitors.
No. 3: In spite of the popular belief, lower-income individuals actually visit fast food establishments less often than upper-income earners. The implication here is that, to some extent, fast-food restaurants should be focusing less on the value-menu aspects of their business and more on the higher-margin, higher-price-point items that upper-income individuals can afford.
One standout here would be KFC, which is owned by Yum! Brands, Inc. (NYSE:YUM) (which owns Taco Bell and Pizza Hut as well). KFC has traditionally stood at a higher price point than many of its peers, including McDonald’s Corporation (NYSE:MCD), and relies less on its value items and more on its pricier meal combos to drive sales. Forgiving the unfortunate chicken quality issues and subsequent flu scares KFC has suffered through in China, it has had no issues with regard to passing along higher prices to consumers in China, domestically, or in other overseas countries. With strong pricing power often come big profits.
No. 4: If we continue to eat foods known to be unhealthy for us, we’re going to support drug sectors that focus on abating the symptoms most often associated with high fast-food consumption — namely obesity, high blood pressure, high cholesterol, and potentially diabetes.
With approximately 35% of the U.S. population considered obese by the Centers for Disease Control and Prevention, this could be a golden opportunity for chronic-weight-management drugmakers to shine. Two recently approved drugs, Belviq by Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), and Qsymia by VIVUS, Inc. (NASDAQ:VVUS) could be called upon in increasing numbers to treat this nation’s ongoing addiction with fast food. The target audience for both drugs is incredibly large, so the market is certainly big enough to accommodate both companies. In trials, Belviq offered the better safety profile of the two anti-obesity drugs, while Qsymia delivered the better weight-loss percentage.
The article This Disturbing New Fast-Food Data Points to a Scary Trend originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Apple, Chipotle Mexican Grill, Facebook, and McDonald’s.
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