While Taco Bell has been firing on all cylinders, KFC has stumbled abroad. KFC is China’s largest fast food chain.
That was once a source of great growth for the company, but now it might be holding it back. Bird flu scares have affected sales, while the Chinese government has come after the company for health violations.
Because of its large KFC operation in China, Yum Brands is seen as somewhat of a play on the Chinese consumer. Shares of Yum Brands will typically rally or sell-off on days when there is significant Chinese economic news.
Burger King has notably less Chinese exposure than Yum Brands, but it too has been trying to reinvent itself.
Burger King recently emerged from private equity ownership. While private, its owners redesigned the chain’s menu, offering unique foods like sweet potato fries and veggie burgers on a seasonal basis.
Bill Ackman’s Pershing Square owns a big portion of Burger King, and the activist investor has given a presentation on the company in the past.
According to Ackman, Burger King has stumbled in the past because of its limited appeal. Specifically, Burger King’s menu and advertising has appealed only to young adult males. By reinventing its food and changing its advertising, Burger King should be able to attract other demographics.
Ackman believes that shares of Burger King could, if the turnaround goes according to plan, hit $45 by 2016.
Can McDonald’s weather the storm?
In many ways, McDonald’s is facing some of the biggest challenges it has seen in years. New fast food chains, as well as remodeled old ones, are threatening to rob McDonald’s of key customers — particularly among the millennial generation.
McDonald’s decision to shake up its menu is in direct response to those challenges. New items like the McWrap are intended to appeal to millennials, while additional menu tweaks should generate interest and help McDonald’s beat back the advance of rivals like Chipotle, Taco Bell and Burger King.
McDonald’s still seems to be one of the safer stocks out there, however, anyone invested in the company should keep a close eye on the evolving fast food landscape.
Joe Kurtz owns shares of Burger King Worldwide (NYSE:BKW). The Motley Fool recommends Burger King Worldwide, Chipotle Mexican Grill (NYSE:CMG), and McDonald’s. The Motley Fool owns shares of Chipotle Mexican Grill and McDonald’s.
The article McDonald’s Continues to Shake Up its Menu originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.
Salvatore “Sam” 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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