How Are Fast Food and Pizza Companies Expanding Their Businesses?
How Did Fast Food and Pizza Companies Fare in 4Q15?
Unit growth
After discussing same-store sales growth in the last article, we’ll discuss another revenue driver, unit growth, in this article.
With the majority of fast food and pizza companies focused on expanding their restaurants through franchisees, the addition of new restaurants can’t be a burden on the companies, as franchisees bear the capital expenditure.
Expanding unit growth
In the above chart, we can see that Domino’s Pizza (DPZ) has expanded its unit count more than the other companies have expanded theirs. DPZ recorded unit growth of 7.7%, with franchisees growing at 7.9% and company-operated restaurants increasing by 1.9%. DPZ was followed by Papa John’s (PZZA) and Burger King of Restaurant Brands International (QSR). PZZA recorded unit growth of 4.9%, with franchisees growing 5.4% and company-owned restaurants growing 2.3%. QSR recorded systemwide unit growth of 4.4%.
Other companies such as McDonald’s (MCD), YUM! Brands (YUM), and Sonic (SONC) all recorded unit growth, with the focus being on franchising. Jack in the Box’s (JACK) overall unit growth remained the same, but the company re-franchised 18 restaurants.
The unit growth of Wendy’s Company (WEN) fell by 0.6%, with its unit count falling by 36 units. The company’s franchise units grew by 5.2%, while its company-owned restaurants fell by 3.4%.
Having discussed revenue drivers, in the next article, let’s discuss how efficiently the companies under review are utilizing their restaurant space.
You can gain exposure to restaurant stocks by investing in the iShares U.S. Consumer Services ETF (IYC), which invests more than 4% of its portfolio in restaurant companies.
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