We recently compiled a list of the 12 Best Fast Food Stocks to Buy Now. In this article, we are going to take a look at where The Wendy’s Company (NASDAQ:WEN) stands against the other fast food stocks.
Fast food stocks are businesses that run quick-service restaurants. These stocks can be a smart option to invest in the restaurant industry, which tends to perform well even during economic downturns due to its low costs and convenience. For example, the early COVID-19 pandemic was not favorable for the restaurant business overall, but fast-food chains that were able to offer curbside pickup, delivery, and drive-thru services performed better than their competitors that relied on dine-in. A challenging economic situation presents fewer risks because many fast-food restaurants prioritize providing great value.
As per a research report, the global fast food market has expanded gradually in recent years. It will grow at a compound annual growth rate (CAGR) of 2.9%, from $645.2 billion in 2024 to $663.92 billion in 2025. Changes in customer choices and lifestyles, rapid urbanization, globalization, greater demand for convenience meals, and an increase in the working population have all contributed to historic expansion. The fast-food market’s largest region in 2024 was North America. Asia-Pacific is anticipated to be the fastest-growing region over the projection period.
Automation is changing the fast-food service business in the United States. Robotic systems and artificial intelligence tools are now reducing production times and increasing efficiency. Complex beverage preparation time has been reduced from 87 to just 36 seconds due to a new drink-making system. In the meantime, a dual-sided grill has sped up cooking by 70% in high-volume locations, and an avocado-processing robot reduces prep time by 50%. According to a National Restaurant Association research released in February 2023, 58% of restaurant operators anticipated that 2023 would see a rise in the usage of technology and automation to cope with labor shortages. In a May 2023 poll, HungerRush found that 36 percent of 1,000 Americans stated they believed that large restaurant chains lacked enough employees to process orders, make food, and deliver food.
Chief information officer Aaron Nilsson of Jet’s Pizza, a franchise with locations in Michigan, introduced a phone bot driven by artificial intelligence to take orders for pizza. He stated:
“Now most consumers expect their local pizza place and their favorite coffee house to remember their last order, know what credit card they want to use, and make it quick and easy for them to complete an order. Society has moved on and automation is expected – even from the small-time operator.”
According to a 2024 LendingTree survey, 78% of Americans now consider fast food a luxury, with prices rising by more than 60% since 2014. Quick-service restaurants (QSRs) have been compelled by this change to reconsider what value is. Companies are prioritizing quality, convenience, and technology over price competition to defend higher prices. According to Savneet Singh, CEO of a significant restaurant technology business, the value today isn’t just about price; it’s about the entire experience. Moreover, technology is being used by businesses to improve this perceived value. AI-powered kiosks, drive-thru technology, and mobile ordering shorten wait times and customize service, while kitchen automation increases reliability. These days, loyalty programs use data analytics to provide hyper-personalized rewards, which boosts consumer engagement and encourages repeat visits.
However, affordability is still crucial. The expense of fast food has caused 62% of consumers to cut back on their purchases, which has led several businesses to bring back $5 meal offers, as per the LendingTree study. A combination of price, quality, convenience, and personalization is the new QSR value equation. QSRs have the potential to redefine luxury as intelligent, easily accessible service by utilizing technology and loyalty.
A closeup of a juicy hamburger sandwich with tomatoes and lettuce, on a sesame bun.
Our Methodology
For this article, we sifted through the online rankings to form an initial list of the 20 Fast Food Stocks. From the resultant dataset, we chose 12 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 1,009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s revenue growth year-over-year as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
The Wendy’s Company (NASDAQ:WEN)
Number of Hedge Fund Holders: 33
Revenue growth (YOY): 2.98%
The Wendy’s Company (NASDAQ:WEN) boasts a value offer centered around fresh and craveable products at competitive pricing points, making it the second-largest quick-service restaurant burger company in the United States, after McDonald’s. Following the 2006 and 2011 divestitures of Tim Hortons and Arby’s, the company now only operates the burger brand, generating sales from more than 7,200 locations in 30 countries as of the end of 2024. It is among the Best Food Stocks.
Over the past few years, The Wendy’s Company (NASDAQ:WEN) has had an upsurge because of its breakfast platform’s renewed launch, store redesign, and great value positioning. Since 2019, mid-single-digit annual US revenue growth has been supported by steady same-store sales growth and solid cash-on-cash returns. The company is focusing on its breakfast business, unit development, and international expansion to fuel its next phase of growth. Morningstar analysts still believe that the company’s efforts to expand internationally are unlikely to produce tangible results, but they also point out that significant development agreements in Asia-Pacific suggest that The Wendy’s Company (NASDAQ:WEN)’s brand might be strong enough to make a modest entry into developing foreign markets. Analysts continue to believe that success is unlikely in regions where Burger King and McDonald’s already hold a dominant market share.
In fiscal Q4 2024, The Wendy’s Company (NASDAQ:WEN) announced a new target dividend payout ratio of 50% to 60% of adjusted profits as part of an overhaul to its capital allocation policy. The company can increase growth and long-term shareholder value due to its new capital allocation policy. The business’s operations are resilient. The company’s global same-restaurant sales grew for the fourteenth consecutive year in fiscal year 2024. Systemwide sales for the business jumped 5.4% to $3.7 billion in fiscal Q4 2024. Adjusted revenues for the quarter were $459.3 million, a 6.4% rise from total revenues of $574.3 million. Additionally, its adjusted EBITDA surged by 8.6% to $137.5 million.
Overall, WEN ranks 9th on our list of the 12 Best Fast Food Stocks to Buy Now. While we acknowledge the potential of Fast Food companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than WEN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.