Micky D's (MCD) - Get Report finally served up something palatable: strong sales. It trounced Wall Street expectations, leaving investors in most sit-down eateries with that "duuuh" look on their face.
Third quarter revenue sank 10.4% year-over-year but topped consensus estimates, while earnings of $1.76 per share came up a penny short of analysts' expectations.
So where's the blowout? McDonald's may have seen sales fall, but operating income soared 44% in the quarter. Additionally, comparable-store sales results remain strong, with 6% growth vs. estimates calling for 4.5%. Comp-store sales in the U.S., international and high-growth markets each exceeded expectations as well.
In a nutshell, McDonald's is delivering and its stock is up 43% over the last 12 months as a result. But what companies are coming at the expense of McDonald's resurgence?
Many would immediately think of other fast-food stocks, like Wendy's (WEN) - Get Report (which also owns an 18.5% stake in Arby's) and Restaurant Brands International (QSR) - Get Report , which owns brands like Burger King, Tim Hortons and as of late-March, Popeyes Louisiana Kitchen.
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But ironically, both of these companies are doing well. Wendy's stock is up 39% over the past 12 months, while Restaurant Brands International stock is up almost 42%. Yum Brands (YUM) - Get Report , which owns brands like Taco Bell and KFC,hasn't had the easiest time. But since it spun off Yum China (YUMC) - Get Report , things have been going pretty well for them, too.
So who are the laggards? Starbucks (SBUX) - Get Report hasn't had a very easy time, struggling to generate comp-store sales growth in the U.S. thanks in part to the debacle surrounding its Mobile Order & Pay platform. But shares are only flat over the past year. Domino's Pizza (DPZ) - Get Report has also stumbled, but not fallen. Shares are up about 10% over the past year, but are down almost 20% from the highs.
But maybe it's not the fast-food for fast-casual food sectors that are coming under pressure from McDonald's. After all, if Burger King and Wendy's are still doing OK; it must be another industry under pressure. Look no further than sit-in dining.
Admittedly, some companies -- like Cracker Barrel (CBRL) - Get Report , Denny's (DENN) - Get Report and Darden Restaurants (DRI) - Get Report -- have done well. But a vast majority have really struggled.
Over the past year, Cheesecake Factory (CAKE) - Get Report is down 14%, Buffalo Wild Wings (BWLD) is down 24% and Ruby Tuesday (RT) , despite being bought out, is still down 23%. Fogo de Chao (FOGO) and Noodles (NDLS) - Get Report are down 3.5% and 4.3% respectively. Although over the last two years they are down 28% and 67%, respectively.
DineEquity (DIN) - Get Report , which owns brands like Applebee's and IHOP, is down 41%, while Brinker International (EAT) - Get Report , which owns brands like Chili's and Maggiano's, is down 40%. On the plus side, if we can call it that, Bloomin' Brands (BLMN) - Get Report , with brands like Outback, Fleming's and Carrabba's, is up 1%.
Zoe's Kitchen (ZOES) is down 44%.
So what's the pitch? McDonald's isn't crushing its peers. In fact, the fast-food industry is pressuring (but not crushing) fast-casual options like Domino's and Starbucks, but is absolutely eating the lunch of sit-down restaurants. The question is, how long will that trend continue, as consumer appear fine with opting for more convenient options over timely sit-down alternatives.
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McDonald's international offerings are...interesting...to say the least:
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.