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 Yum! Brands, Inc. (NYSE:YUM) 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 chef in a kitchen preparing a fast food meal of chicken, pizza and burgers.
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).
Yum! Brands, Inc. (NYSE:YUM)
Number of Hedge Fund Holders: 33
Revenue growth (YOY): 6.69%
Yum! Brands, Inc. (NYSE:YUM) is a US-based restaurant operator with four brands in its portfolio: Habit Burger & Grill (almost 400 units), Pizza Hut (20,225 units), Taco Bell (8,757 units), and KFC (31,981 global units at year-end 2024). It is the second-largest restaurant company in the world, behind McDonald’s ($131 billion), ahead of Restaurant Brands International ($44 billion) and Starbucks ($30 billion), with more than $65 billion in 2024 systemwide sales. It is ranked eighth on our list of the Best Food Stocks.
The ability of the biggest operators, like Yum! Brands, Inc. (NYSE:YUM), to expedite crucial investments in e-commerce platforms, delivery integration, and technological solutions that satisfy the changing needs of the contemporary restaurant customer, despite the fact that the restaurant industry has undergone significant change in recent years, gives investors confidence. More than 50% of globally systemwide sales now come from digital channels, which analysts anticipate will continue to be a key component of its strategic playbook. Recent acquisitions show how much importance the company has placed on digital upgrades. Franchise unit economics are strengthened, and its appealing unit development flywheel is propelled by the company’s efficient and cost-effective delivery of its digital tools to franchisees.
Citi maintained a Neutral rating on Yum! Brands, Inc. (NYSE:YUM) also raised the price target from $148 to $151. In a research note, the analyst informs investors that the shares have outperformed year-to-date and that this trend should continue through Q1 earnings, barring any significant negative developments in global comp growth or store openings.
Overall, YUM ranks 8th 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 YUM 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.