Reflecting On Traditional Fast Food Stocks’ Q1 Earnings: Arcos Dorados (NYSE:ARCO)
As the Q1 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers in the traditional fast food industry, including Arcos Dorados (NYSE:ARCO) and its peers.
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 decent Q1; on average, revenues were in line with analyst consensus estimates. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and while some of the traditional fast food stocks have fared somewhat better than others, they collectively declined, with share prices falling 2% on average since the previous earnings results.
Arcos Dorados (NYSE:ARCO)
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 $1.08 billion, up 9.1% year on year, topping analysts' expectations by 5.6%. It was a decent quarter for the company: Arcos Dorados blew past analysts' revenue and adjusted EBITDA expectations. The CEO struck a positive tone, saying "We see significant growth potential in Latin America and the Caribbean, and we are accelerating restaurant openings."
The stock is down 8.6% since the results and currently trades at $10.25.
Read our full report on Arcos Dorados here, it's free.
Best Q1: El Pollo Loco (NASDAQ:LOCO)
With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.
El Pollo Loco reported revenues of $116.2 million, up 1.4% year on year, outperforming analysts' expectations by 4.6%. It was an incredible quarter for the company, with an impressive beat of analysts' earnings estimates.
The stock is up 22.5% since the results and currently trades at $10.52.
Is now the time to buy El Pollo Loco? Access our full analysis of the earnings results here, it's free.
Weakest Q1: Starbucks (NASDAQ:SBUX)
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Starbucks reported revenues of $8.56 billion, down 1.8% year on year, falling short of analysts' expectations by 6.5%. It was a weak quarter for the company, with a miss of analysts' revenue estimates.
The stock is down 9% since the results and currently trades at $80.55.
Read our full analysis of Starbucks's results here.
Papa John's (NASDAQ:PZZA)
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ:PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Papa John's reported revenues of $513.9 million, down 2.5% year on year, falling short of analysts' expectations by 5.4%. It was a mixed quarter for the company, with an impressive beat of analysts' gross margin estimates but a miss of analysts' revenue estimates.
The stock is down 14.2% since the results and currently trades at $49.
Read our full, actionable report on Papa John's here, it's free.
Wendy's (NASDAQ:WEN)
Founded by Dave Thomas in 1969, Wendy’s (NASDAQ:WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.
Wendy's reported revenues of $534.8 million, up 1.1% year on year, falling short of analysts' expectations by 1.1%. It was a solid quarter for the company, with an impressive beat of analysts' gross margin estimates and a decent beat of analysts' earnings estimates.
The stock is down 7.7% since the results and currently trades at $18.12.
Read our full, actionable report on Wendy's here, it's free.
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