SOURCE: Bellwether Report

Bellwether Report

June 21, 2010 08:36 ET

Fast Foods Serve the Recovery Dish Better Than the Overall Restaurants Industry

JOHANNESBURG, SOUTH AFRICA--(Marketwire - June 21, 2010) - -- The sour flavoring of the 2007-2009 economic uproar has financially starved the restaurants industry which saw the number of their regulars drastically melting away. The recession took away much of the consumer confidence required to maintain an adequate level of discretionary spending, and people chose to stay home and eat those home-made dishes forfeiting dining-out plans. Even as the economic recovery slowly starts to thaw like a 24-pounder turkey, the persisting high number of unemployment maintains a firm restraint on growth in the restaurant industry. However, a few players in the fast-food space have begun to show some juicy comparable-store sales improvement in the first few months of 2010. 

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McDonald's Corp. (NYSE: MCD), one of the behemoth of the U.S. fast food industry, has seen a steady growth in its same-store sales since February of this year. The fast-food chain giant has also been consistently delivering on its earnings, and it is among the few in the industry to have a healthy balance sheet. Burger King, conversely, has seen its revenue decline in the first quarter of 2010 due to the tough competitive environment as all players in this space have got their promotional games on high flames. However, one of the most successful stories throughout the recession and in the recent quarter for consumers and traders is without doubt Chipotle Mexican Grill Inc. (NYSE: CMG). The company which was once owned by McDonald's has been on a tear in recent months with 121 new restaurants opened in 2009 when most restaurants were down to skeleton staffing. It is planning to grow even further in 2010 with the opening of more restaurants. What makes this restaurant appealing for people to want to shed their home-dining habits and go to Chipotle is that the restaurant chain provides people with first-class delicatessen at affordable prices. 

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Whilst a few have found the secret ingredient to beat the economic odds and strive, many in the restaurants industry in the U.S. still remain at the mercy of some of the tribulations still plaguing the economy. Analysts believe that as more jobs are created and people start to find new job opportunities, restaurants will enjoy a regain in consumer confidence, until then this industry will be in torment minus a few exceptions. Register now at to have free access to this report.

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