This Fast Food Place Will Be A Dinosaur by 2015
Ok, this post has been way overdue. I know about these 3 companies more than most people and I will just spit it from the head. Let's move away from all the detailed financial charts and all. Let's get to what we know. Let's get to what we see everyday on our way to work, on our vacations, on our weekends, in our social lives. What am I talking about? I'm talking about FAST FOOD.
Simple war between the 3 forces I believe are in the spotlight. They are MCD, WEN, and YUM. I will leave out Burger King. Their place in fast food is pretty much unaffected. They do their own thing, and they do it well for what they got going for them. They won't be a dinosaur anytime soon.
Who will be? Wendy's that's who! Before I get to bashing Wendy's beyond belief, I will say what MCD and YUM has. Both have huge brand recognition and respect. MCD just a few years ago was on the decline. Food quality was poor. Management was losing control. Stock was no where near what it is today. Then they changed. You can find their change on many MSNBC shows and documentaries. They renovated their locations. Added great colors to the buildings. Tremendously improved their menu. And with all that, they stuck to what they do best: Big Mac's, fries, and their deserts.
YUM is similar. They make up the KFC, Pizza Hut, Taco Bell, Long John Silvers, and A&W All-American Food Restaurants brands. They have great success in each one. KFC keeps up with the times in serving grilled chicken now. Pizza Hut serves a wide range of foods they never would of touched 10 years ago: wings, pastas, etc. Taco Bell seems to invent a new taco every month and make insane margins off these. LJS and A&W are at the bottom but still producing results.
Now we get to Wendy's! Wendy's has been a complete failure in the American fast food industry. You see those buildings? They are the SAME ones 10-20 years ago. Nothing has changed. Not even an update. Pretty soon I wouldn't be surprised if some fell apart. What has changed? Well they removed their fried chicken which competed against KFC. Wrong move. They still got their sandwiches but can someone tell me what is in them? I swear the quality just went down the toilet. Their fries are still the same (2nd or 3rd best behind MCD and BKC). But now they keep changing their menu every month it seems! Salads? Asian chicken? Spicy nuggets? Back to salads again? Oh now they added breakfast? What took them so long to come up with that idea?
Wendy's is trading around $4/share which seems like forever. They are with Arby's who equally has menu issues. On top of that, just open your eyes. MCD parking lots, drive thrus, and stores are packed from morning to night. Wendy's is always empty. I pass them every day. They are right next to a MCD or Burger King or Taco Bell and Wendy's is always losing. If they can't rennovate their stores, parking lots, and find a solid menu, do you really thing this animal will survive much longer?
Bottom line stick with MCD, YUM, or even BKC. Stay away from WEN unless you think they will be bought out. Even if they are bought out, I doubt there will be much of a premium.
Wendy's. Past superstar. Current struggle, Future dinosaur.