© Reuters. Forget Chipotle, Buy These 4 Restaurant Stocks Instead
As people gradually return to dining out given that almost half of the U.S. population is fully vaccinated against COVID-19, the restaurant industry is witnessing a solid recovery after a devastating year. While Mexican fast food giant Chipotle Mexican Grill (NYSE:) doesn’t look sufficiently fit to capitalize on the industry’s recovery, we think the shares of restaurant operators McDonalds (MCD), Starbucks (SBUX), Texas Roadhouse (NASDAQ:), and The Wendy’s (WEN) are, in contrast, well positioned to deliver solid returns in the coming months. Let’s discuss.Most restaurants have redesigned their business models to offset some of the losses caused by the COVID-19 pandemic restrictions. And primarily restaurants in the fast-food industry have been able to stay in business and generate profits by implementing heightened hygienic measures, online delivery, and drive-throughs.
But, although fast-food chain Chipotle Mexican Grill, Inc. (CMG) has managed to gain significant ground over the past year, the stock has been losing its momentum lately on concerns over the company’s growth prospects. While CMG’s revenue increased 23.5% to $1.74 billion in the first quarter of 2021, its operating expenses surged 18% to $1.58 billion. In addition, the company closed five of its restaurants in the first quarter. And CMG’s recent menu price hike by roughly 4%, to cover the cost of raising its workers’ wages has piqued investors’ concerns.
In contrast, McDonald’s Corporation(MCD), Starbucks Corporation (NASDAQ:), Texas Roadhouse, Inc. (TXRH), and The Wendy’s Corporation (WEN) are better positioned to take advantage of the rising demand for indoor dining given that nearly 50% of the U.S. population is fully vaccinated against COVID-19. Since these companies have plenty of room for growth, we believe their stocks could be solid bets now in contrast to CMG’s.
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