This trend looks set to continue into the summer months as McDonald’s Corporation (NYSE:MCD) continues to respond to its customers by adjusting its menu items. The company currently has 140 items on its menu and has 160 new items in the pipeline. McDonald’s is offering more nutritious items and is looking to expand the time it serves breakfast items, which have higher margins than lunch or dinner items.
McDonald’s has the best management in the business and it is quick to address any slowdown in sales. Shareholders are also comforted by the 3.1% dividend yield.
Another major competitor for both companies is Burger King Worldwide Inc (NYSE:BKW). Burger King Worldwide Inc (NYSE:BKW) is not on every corner like McDonald’s, but the company does have a much bigger footprint than Sonic. Burger King Worldwide Inc (NYSE:BKW) has been dealing with a weak start to the year as well with comparable-store sales down 1.4%. Profits have still been going strong though as the company has been aggressive in cutting costs and expenses.
Burger King Worldwide Inc (NYSE:BKW) has been adjusting its menu to keep up with the competition. This summer the company will launch the “BK Rib Sandwich” to go up against McDonald’s popular “McRib.” Burger King Worldwide Inc (NYSE:BKW) is also launching a delivery service for its menu items. The program is already performing well in New York, Miami, Houston, Los Angeles, Chicago, San Francisco, and Washington, D.C. Phoenix, Denver, Las Vegas and Sacramento, Calif. are due to get the service next. Orders can be made online or via the telephone and the food is delivered as promised thanks to proprietary thermal-packaging technology.
Burger King Worldwide Inc (NYSE:BKW) is looking to be active in returning cash to shareholders. The company just raised the dividend by 20% and initiated a $200 million share buyback.
Foolish assessment
The fast-casual restaurant business is a great business to be in. All three companies are solid players, but I see Sonic as having the most room for growth. There are plenty of opportunities to increase the company’s presence in the U.S. and I see that benefiting shareholders as revenue and profits increase.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide and McDonald’s. The Motley Fool owns shares of McDonald’s. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article America’s Drive-In Is the Place to Be originally appeared on Fool.com is written by Mark Yagalla.
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