Burger King Worldwide Inc (BKW), The Wendy’s Co (WEN): Greasing the Wheels of Fast Food Commerce

The Wendy’s Co (NASDAQ:WEN) has many of the same growth strategies in place as Burger King: remodeling (more bistro like decor), international expansion, and menu innovation (witness their surprise hit, the pretzel bacon cheeseburger).

The Wendy’s Co (NASDAQ:WEN) is now close to being 85% franchisee operated with 6,544 restaurants, both international and domestic. It, too, has a high short interest of 14.00% after the stock’s 55.56% run this last year. The forward P/E is 27.46 and the PEG is higher than Burger King at 2.21.

Another burger chain with more than 50% franchisees is Jack in the Box Inc. (NASDAQ:JACK). In 2012 alone, the company earned franchise revenue (rent, fees, and royalties) of $325.8 million and with $182 million already this year, the company looks to surpass that in 2013.

Jack in the Box Inc. (NASDAQ:JACK) is in the middle of a company-wide reorganization, closing 10% of its 600 fast casual Qdoba Mexican Grill restaurants (think Chipotle Mexican Grill, Inc. (NYSE:CMG)), located in 44 states in the U.S. and Canada. The company is the smallest chain of these three with 2,200 Jack in the Box Inc. (NASDAQ:JACK) restaurants in 21 states in the U.S.

The company is expanding more on the QDoba side with 70-75 new locations this year to only 20 Jack in the Box Inc. (NASDAQ:JACK) openings. One has to wonder why the company closes QDobas only to open just as many? Especially after two quarters of guiding QDoba same-store sales to be flat. Competing against Chipotle also seems like a chump’s game.

The Foolish takeaway, no deliver it instead!

Although The Wendy’s Co (NASDAQ:WEN) has the pretzel bacon cheeseburger and a higher yield, I like Burger King better. I used to like Jack in the Box Inc. (NASDAQ:JACK), but Burger King, with almost 99% franchisee operation, looks more attractive. This delivery initiative also radically differentiates it from almost every quick serve restaurant out there (save pizza joints). I also think its international ambitions look promising and those annuity like cash flows should eventually add up to dividends in investors’ pockets.

The article Greasing the Wheels of Fast Food Commerce originally appeared on Fool.com and is written by AnnaLisa Kraft.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide. AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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