Reflecting On Traditional Fast Food Stocks’ Q3 Earnings: Portillo's (NASDAQ:PTLO)
Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Portillo's (NASDAQ:PTLO) and the best and worst performers in the traditional fast food industry.
Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
The 14 traditional fast food stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates.
While some traditional fast food stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 5% since the latest earnings results.
Portillo's (NASDAQ:PTLO)
Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.
Portillo's reported revenues of $178.3 million, up 6.9% year on year. This print fell short of analysts’ expectations by 2.1%, but it was still a satisfactory quarter for the company with an impressive beat of analysts’ EPS estimates but a miss of analysts’ same-store sales estimates.
Michael Osanloo, President and Chief Executive Officer of Portillo’s, said, “While our top line results for the quarter fell short of expectations, I’m proud of how our team protected margins and drove cash flow. We’re profitable, we’re controlling the levers we can, and we’re positioned for lasting, long-term growth.”
Portillo's Total Revenue
Unsurprisingly, the stock is down 29.4% since reporting and currently trades at $9.64.
Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE:BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.
Dutch Bros reported revenues of $338.2 million, up 27.9% year on year, outperforming analysts’ expectations by 4.1%. The business had a stunning quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ same-store sales estimates.
Dutch Bros Total Revenue
Dutch Bros pulled off the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 61.9% since reporting. It currently trades at $56.55.
Famous for its Original Glazed doughnuts and parent company of Insomnia Cookies, Krispy Kreme (NASDAQ:DNUT) is one of the most beloved and well-known fast-food chains in the world.
Krispy Kreme reported revenues of $379.9 million, down 6.8% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
Krispy Kreme delivered the slowest revenue growth and weakest full-year guidance update in the group. As expected, the stock is down 22% since the results and currently trades at $9.69.
One of China’s largest restaurant companies, Yum China (NYSE:YUMC) is an independent entity spun off from Yum! Brands in 2016.
Yum China reported revenues of $3.07 billion, up 5.4% year on year. This result beat analysts’ expectations by 1.5%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ EPS estimates.
The stock is up 2.2% since reporting and currently trades at $46.05.
Translating to “Golden Arches” in Spanish, Arcos Dorados (NYSE:ARCO) is the master franchisee of the McDonald's brand in Latin America and the Caribbean, responsible for its operations and growth in over 20 countries.
Arcos Dorados reported revenues of $1.13 billion, flat year on year. This number surpassed analysts’ expectations by 0.5%. It was a very strong quarter as it also recorded an impressive beat of analysts’ same-store sales estimates and a solid beat of analysts’ EBITDA estimates.
The stock is down 13.2% since reporting and currently trades at $7.30.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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