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Filed under: Marketing and advertising, McDonald's (MCD), Yum Brands (YUM), Wendy's Intl (WEN), Burger King Hldgs (BKC)

Yum! Brands (NYSE: YUM) wants to educate its patrons. No, it's not going to be offering history lessons to go along with its personal pizzas, fried chicken and burritos. It just wants to make sure you know exactly how many calories are in the stuff you eat at its restaurants. The information will be posted at company-owned locations over the next few years. Management is hoping that franchise locations will also participate in the initiative (I'm sure most eventually will).

Personally, I think this is a great idea. How could anybody be opposed? After all, if I'm in a Pizza Hut, I want to know how much damage I'm doing to myself. Yes, I am one of those people who actually checks out the nutrition pages on the sites of fast-food joints such as McDonald's (NYSE: MCD), Burger King (NYSE: BKC) and Wendy's Arby's Group (NYSE: WEN).

But yes, there is a downside for shareholders when this type of information is made available. Indeed, the more I've learned about the health effects of a bad diet, the more conservative I've been about going to a KFC or a McDonald's. No doubt Yum! will see some challenges from people scaling back on buying the junk food it sells. Will there be a significant effect? Will Yum! and its various chains disappear as a result of this decision? No. Management will simply adjust, if it becomes necessary, and will try to offer healthier selections.

Continue reading Should Yum! Brands reveal calorie data?

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Filed under: Marketing and advertising, McDonald's (MCD), Yum Brands (YUM), Wendy's Intl (WEN), Burger King Hldgs (BKC)

Yum! Brands (NYSE: YUM) wants to educate its patrons. No, it's not going to be offering history lessons to go along with its personal pizzas, fried chicken and burritos. It just wants to make sure you know exactly how many calories are in the stuff you eat at its restaurants. The information will be posted at company-owned locations over the next few years. Management is hoping that franchise locations will also participate in the initiative (I'm sure most eventually will).

Personally, I think this is a great idea. How could anybody be opposed? After all, if I'm in a Pizza Hut, I want to know how much damage I'm doing to myself. Yes, I am one of those people who actually checks out the nutrition pages on the sites of fast-food joints such as McDonald's (NYSE: MCD), Burger King (NYSE: BKC) and Wendy's Arby's Group (NYSE: WEN).

But yes, there is a downside for shareholders when this type of information is made available. Indeed, the more I've learned about the health effects of a bad diet, the more conservative I've been about going to a KFC or a McDonald's. No doubt Yum! will see some challenges from people scaling back on buying the junk food it sells. Will there be a significant effect? Will Yum! and its various chains disappear as a result of this decision? No. Management will simply adjust, if it becomes necessary, and will try to offer healthier selections.

As the timeline progresses, society will continue to demand healthier fare. There's no turning back the clock on that count, thankfully. But, trust me, you can put all the calorie data you want in the restaurants, and you simply won't eliminate America's habit of bulking up on Big Macs and secret-recipe chicken. Especially considering that the health trend has been around for a while.

When you see a stock like McDonald's working so well in such an environment, one conclusion becomes obvious: innovative marketing and better menu selection can counteract the ill effects of a lifestyle-conscious consumer base. It's no secret that McDonald's has positioned itself as not only a place where you can gorge on double-quarter-pounders-with-cheese, but as a fast-food joint where you can pick up a nice fresh salad.

I think Yum! is engaging sound public relations with this calorie-disclosure program. Transparency can always be considered a value-added element. It also deflects the critics who will be on its back if it doesn't disclose stuff like this.

Yum! isn't doing this out of the kindness of its corporate heart, let's be honest here. But the demand is out there for the increased availability of convenient, accessible nutritional statistics. Responding to the demand allows a business to present a positive image. It can also help improve brand equity.

I think this is a smart move for Yum!, and as reaction to the calorie-disclosure is analyzed, it should help the company determine what kinds of menu investments and marketing promotions might be useful to drive incremental sales increases.

Disclosure: I don't own any company mentioned; positions can change at any time.

 

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Filed under: Earnings reports, Starbucks (SBUX), McDonald's (MCD), Krispy Kreme Doughnuts (KKD), Burger King Hldgs (BKC)

Here's a quote from the CEO of Krispy Kreme Doughnuts (NYSE: KKD), Jim Morgan, on the company's latest quarterly results: "We are not satisfied with our financial results for the second quarter." That quote can be found in the earnings press release issued by the pastry maker earlier in the week. He's right. Things could be better.

Net sales for Q2 declined over 9%. The net loss for the quarter was $0.03 per diluted share. Granted, this was a vast improvement on a year-over-year basis. In last year's Q2, the red ink was pegged at $0.42 per diluted share (which included impairment charges and lease terminations to the tune of $0.35 per share). As I pointed out in my earnings preview, the expectation was for a loss of a penny.

Now, here's something interesting. When it comes to cash flow, Krispy Kreme actually did all right. On a six-month basis, management reported approximately $9.5 million in cash from operations. In the comparable period twelve months ago, the company generated $1.9 million from operations. But, you know, somehow I don't think the operational cash flow is going to do much for me this time around. When I gaze at the overall picture, see where this company has been and where it is now, look at the comps, etc., I can't say I'm moved to take it seriously as a potential investment idea. Obviously traders are having a ball with it. I can't, however, say that I even want to use it as a trading vehicle.

The stock plunged this week, and I can honestly say that it isn't any sort of bargain. And just think of all the better alternatives out there. Want to invest in a chain of stores that sells food? Why limit yourself to doughnuts? You could look at McDonald's (NYSE: MCD) or Burger King (NYSE: BKE). I know those two aren't really direct competitors of Krispy Kreme, but truth be told, they came up in my mind as I was writing this in terms of companies I would look at first before Krispy Kreme. I'd even consider Starbucks (NASDAQ: SBUX) before the down-on-its-luck doughnut shop.

Bottom line: I say don't be tempted to trade this one. Low-priced stocks of big names do hold the allure of fast money. Not in this case. You could lose a lot here. I'll echo my earnings preview by saying that staying away from Krispy Kreme continues to be the wise move.

Disclosure: I don't own any company mentioned; positions can change at any time.

 

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Filed under: Earnings reports, Starbucks (SBUX), McDonald's (MCD), Krispy Kreme Doughnuts (KKD), Burger King Hldgs (BKC)

Here's a quote from the CEO of Krispy Kreme Doughnuts (NYSE: KKD), Jim Morgan, on the company's latest quarterly results: "We are not satisfied with our financial results for the second quarter." That quote can be found in the earnings press release issued by the pastry maker earlier in the week. He's right. Things could be better.

Net sales for Q2 declined over 9%. The net loss for the quarter was $0.03 per diluted share. Granted, this was a vast improvement on a year-over-year basis. In last year's Q2, the red ink was pegged at $0.42 per diluted share (which included impairment charges and lease terminations to the tune of $0.35 per share). As I pointed out in my earnings preview, the expectation was for a loss of a penny.

Now, here's something interesting. When it comes to cash flow, Krispy Kreme actually did all right. On a six-month basis, management reported approximately $9.5 million in cash from operations. In the comparable period twelve months ago, the company generated $1.9 million from operations. But, you know, somehow I don't think the operational cash flow is going to do much for me this time around. When I gaze at the overall picture, see where this company has been and where it is now, look at the comps, etc., I can't say I'm moved to take it seriously as a potential investment idea. Obviously traders are having a ball with it. I can't, however, say that I even want to use it as a trading vehicle.

Continue reading Krispy Kreme Doughnuts: Not the treat it once was

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It took a while but finally Chipotle Mexican Grill (CMG) has lost enough customers to McDonalds (MCD) and Burger King (BKC) for it to really begin to effect them. The move downstream in sector after sector across America continues. Strange, considering ho[More...]

Tickermine consulted Burger King Holdings, Inc., for another survey this month. We asked whether lunch or dinner was the busiest shift? Which burger sells best? Was this location over a year old? And is customer traffic up or down this past few weeks? 31 stores were consulted. Lunch was the busiest shift according to 71% of our respondents and only 29% reported it to be dinner. The Whopper still remains King at these locations and was cited by 87% of those we interviewed. 10% of those interviewed cited the Angus Steak Burger as their biggest selling item. 97 percent of those polled said their location was older than a year and only 3% said theirs was new. And a lowly 29% of those polled said business was up over the past few weeks. Most, a whopping 71%, said business was flatter than before.

Tickermine surveyed Burger King Holdings, Inc., the world’s second largest hamburger chain, this week. Our surveyors asked which meal time was busiest, which breakfast menu item sold best, which was their best selling menu item, how long had their store been open, was it close to competition and had customer traffic increased this month? 29 locations were consulted. 25 respondents or 86% reported lunch as their busiest shift. Four or 14% reported dinner. The Croissanwich was the most popular breakfast item, (52%) followed by the Enormous Omelet Sandwich (17%), Sausage Egg & Cheese Biscuit (14%), Cini Minis (7%) and the Breakfast Burrito, Cheesy Tots and French Toast Sticks each got one mention or were cited by 3% of those polled. The Whopper was cited as the most popular menu item by 17 respondents (59%) and the Double Whopper was the most popular according to 12 respondents or 41% of those polled. 97% of respondents said their restaurant had been open for longer than a year and only 1 (3%) said theirs was old. Four respondents or 14% reported having no nearby competing restaurants. 19 respondents or 66% said they had competition and these stores were about as busy as theirs while 6 respondents or 21% reported having nearby restaurants but that Burger King’s was busier. Five respondents or 17% said they had seen customers increase in the last few weeks but 24 respondents or 83% of those interviewed reported no increase in foot traffic at all.

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