EDUCATION MARKETS SIMULATOR YOUR MONEY ADVISORS ACADEMY

FUNDAMENTAL ANALYSIS SECTORS & INDUSTRIES ANALYSIS

Fundamental The World's 10 Biggest

Analysis
Restaurant Companies
TOOLS FOR FUNDAMENTAL
ANALYSIS

SECTORS & INDUSTRIES

ANALYSIS
BY BARCLAY PALMER | Updated Jun 23, 2019

TABLE OF CONTENTS
McDonald's Starbucks
Yum! Brands Chipotle Mexican Grill 
Restaurant Brands International Darden Restaurants
Domino's Pizza Panera
Dunkin' Brands Group Brinker International
CLOSE -

The world's top 10 restaurant companies, arranged by market capitalization—from

McDonald's to Brinker International—are mostly chain operations. Despite the
cyclical nature of discretionary restaurant spending, some companies have
positioned themselves to weather all types of economic cycles, managing to
consistently maintain profitable growth over the long term. 

These companies—listed by descending market capitalization—are the largest

restaurant companies in the world.

(Note: All numeric figures updated Feb. 8, 2019)

McDonald's
McDonald’s Corporation (MCD) is the largest fast-food restaurant chain in the
world, with roughly 37,000 locations in more than 115 countries. McDonald’s has
staked its claim in the industry through its affordable food and lightning-fast
service. With new CEO Steve Easterbrook, who took the helm in 2015, McDonald's
is looking to improve its operations, which included refranchising 4,000 locations
by the end of 2018 and reducing its selling, general, and administrative (SG&A)
expenses by of $500 million per year. Management also believes the company can
increase its franchisee penetration in China to 25%.

FAST FACT
McDonald's originally sold hot-dogs rather than
hamburgers.

Starbucks
Starbucks Corporation (SBUX) is the world's leading coffee retailer, with more than
27,000 stores globally. The company sells high-quality coffees, teas, and other
beverages, along with a variety of fresh food items. Starbucks created a
reinvigorated food and beverage menu, as well as improved store designs, to
improve customer experience. Management also believes the company is well-
positioned to adapt to evolving consumer behaviors, thanks to branding that
transcends channels with digital, social media, and loyalty programs. Starbucks is
constantly developing a compelling story of domestic growth through new store
formats, such as express stores, beverage trucks, and drive-throughs.

Yum! Brands
Yum! Brands, Inc. (YUM) is the largest quick-service restaurant company in the
world, with more than 45,000 restaurants across 125 countries. The company is
most known for its franchise chains KFC, Pizza Hut, and Taco Bell, and it owns a
controlling interest in China’s Little Sheep. The largest growth potential comes
from Yum!'s presence in China. Last year, more than one-third of its revenue was
derived from this area, and it continues to grow; the current Chinese market is
fragmented, with no dominant force. The Chinese middle class is growing, areas
are becoming more urbanized, and the market is becoming more conducive to
franchising. So, Yum! Brands are well-positioned to claim the future stake as the
largest Chinese franchise restaurant company.

Chipotle Mexican Grill 

Chipotle Mexican Grill, Inc. (CMG) was created with a simple idea that food served
fast did not have to provide the standard—often lower quality—fast-food
experience. It has a simple, customizable menu featuring naturally raised and
organic products.

Important: Sourcing from local ranchers and farmers gives Chipotle

Mexican Grill more influence with suppliers than its larger competitors.

In 2017, Chipotle had $4.4 billion in sales (2018 numbers were not available at the
time of publication), making it the leader in the Mexican food category and a large
player in the overall $40 billion fast-food sectors.

Restaurant Brands International

Restaurant Brands International, Inc. (QSR) is the third-largest global quick-service
restaurant chain created by a high-profile merger of Burger King and Tim Horton's
franchise brands. The two have developed strategies that they plan to execute for
the next few years. With influence from 3G Capital as a 51% shareholder, the
company's stock price should see more ramps, as it did from its lows in 2016 to
late 2017 when the price per share more than doubled.

Darden Restaurants
Darden Restaurants Inc. (DRI) owns and operates several dining restaurant brands,
such as Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama Breeze,
Seasons 52, Eddie V’s, and Yard House. Darden has recently implemented a
number of structural and operational changes under its CEO, Gene Lee, who took
over in 2015. Management plans to deliver revenue growth and margin
improvements through an increased emphasis on everyday value, a reduction in
deep discounting, and greater takeout and alcoholic beverage sales. Darden also
implemented a short-term initiative for its real estate holdings, including ongoing
sales-leaseback transactions for 64 restaurant properties and a spinoff of 424
company properties into a standalone real estate investment trust (REIT) that goes
by the Four Corners Property Trust (FCPT).

Domino's Pizza
Domino's Pizza Inc. (DPZ) in 2018 was the largest pizza company in the world, with
more than 11,600 stores. Domino's offers a wide range of choices for pizza
products, such as traditional hand-tossed pizza, Brooklyn-style pizza, and pizza
with crunchy, thick crusts. Domino's has also increased its margins with
complementary items, such as oven-baked sandwiches, pasta, boneless chicken
and wings, chocolate cakes, and soft drinks. Management's long-term growth plan
is to grow global retail sales through a combination of higher same-store sales and
new openings. The company underwent a successful rebranding in 2013, which is
one of the causes of positive revenue growth since then.

Panera
Panera Bread Company, Inc. (PNRA) operates more than 1,800 company and
franchise-owned bakery-cafes that feature organic and all-natural products. In
2014, the company announced its Panera 2.0 customer experience which resulted
in improved operational performance. The experience focuses on customers
having better ways to order, such as advance ordering for takeout, ordering from
the table for dine-in, and fast-lane kiosks. Currently, franchisees represent 51% of
all the Panera Bread locations, and management expects this to grow closer to
65% over the long term. The growth of franchises allows the company to collect a
royalty of 5% of gross sales from each location, creating a stable and predictable
income stream. 

Dunkin' Brands Group

Dunkin' Brands Group, Inc. (DNKN) is a holding company with more than 11,000
Dunkin' Donuts and 7,800 Baskin-Robbins franchises across the globe. Mainly
known as a doughnut and coffee chain, Dunkin' Donuts has expanded its service
and menu items, such as adding breakfast sandwiches, bakery sandwiches, and
frozen and iced beverages. Franchisees own all the Dunkin' Donuts and Baskin-
Robbins locations, providing an annuity-like stream of royalties to Dunkin' Brands
Group. Each restaurant provides average cash returns of almost 20%, which should
attract a large base of new franchise owners. Dunkin' Brands believes that it can
double the number of its U.S. stores from 8,300 to 17,000.

Brinker International
Brinker International, Inc. (EAT) operates or franchises about 1,600 casual dining
restaurants, mostly consisting of the Chili's and Maggiano's chains. Management's
long-term vision for the company is a dominant global position in casual-dining
restaurants. Brinker plans to grow by continuing to differentiate its brands from its
competition, reducing the costs associated with managing its restaurants and
establishing a strong presence in key markets around the globe.

Related Articles
TOP STOCKS
McDonald’s vs. Burger King: What's the
Difference?

SECTORS & INDUSTRIES ANALYSIS

Who Are McDonald’s Main Competitors?

Partner Links

COMPANY PROFILES
What Consumers Want From
McDonald's

TOP ETFS
The Top 5 Restaurant ETFs for 2016

TOP STOCKS
Who Are Chipotle's Main Competitors?

SECTORS & INDUSTRIES ANALYSIS

Fast-Casual vs. Fast-Food: What's the
Difference?

Related Terms
How Franchisors Work
A franchisor sells the right to use its brand and expertise to one who will open another
branch of the business to sell the same products or services. more

Franchise disclosure document

The franchise disclosure document is a document that must be given to anyone planning
to buy a U.S. franchise. more

What It Means to Have a Franchise

A franchise is a license that a party (franchisee) purchases that allows them access to use a
business's (franchisor) proprietary knowledge, processes, and trademarks to sell products
or provide services under the business's name. more

What Share of Wallet (SOW) Tells Us

Share of wallet (SOW) is the dollar amount customers regularly devote to a particular
brand rather than to competing brands in the same product category. more

What Franchisees Do
A franchisee is a small business owner that purchases the right to use an existing
business's trademarks, associated brands, and other proprietary knowledge. more

What Is Repackaging in Private Equity?

When a private equity firm buys all the stock in a troubled public company and takes it
private in order to revamp its operations and re-sell it at a profit, the process is called
repackaging. more

About Us Terms of Use Dictionary

Editorial Policy Advertise News

Privacy Policy Contact Us Careers

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Investopedia is part of the Dotdash publishing family. The Balance | Lifewire | TripSavvy | The Spruce and more