A Short Overview of the US Fast Food Restaurant Industry

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The US economy is a consumption-based economy. Accordingly many of the industries that drive consumption such as retail, hospitality, services, education, healthcare, fast food, etc. are huge. Among these one of the largest in terms of sales, employment and other factors is the fast food industry. Fast food restaurants are also known as Quick Service Restaurants (QSRs) in industry language. Unlike any other country, QSRs are ubiquitous throughout the country – from highways exits to small towns to malls and everything in between it is almost impossible to avoid noticing them.

According to data by Statista, the industry grew from about $230.0 billion in 2012 to over $331.0 in 2022. In 2020, the industry had a dip in market size due to the Covid-19 pandemic. Except that year the growth has been consistent year after year. This year the market size has shot up to record levels not because thousands of new outlets were opened or the population jumped but because these chains increased their menu prices.

With that said, among the fast food chains the biggest is McDonald’s(MCD) in terms of total revenue. McD pulled in $46B in sales in 2021. The second ranked chain in Starbucks(SBUX) with revenue of $24B. The industry is big enough that plenty of others also generate billions in revenue as shown in the chart below. For instance, relatively small Five Guys made nearly $1.4B last year.

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Source: ‘I’m lovin it’ – 4 new charts on Quick Service Restaurants by Truman, Genuine Impact Newsletter, Substack

Though McD has the highest revenue Starbucks has the most number of stores as shown in the following graphic:

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Source: ‘I’m lovin it’ – 4 new charts on Quick Service Restaurants by Truman, Genuine Impact Newsletter, Substack

Below is another take on QSRs from Visual Capitalist for 2021 data categorized by food type:

Source: Ranked: The Most Popular Fast Food Brands in America, Visual Capitalist

Many years ago a famous book was titled “Fast Food Nation”. It is indeed true that the country is still the fast food nation and the industry shows no signs of slowing down. The graphic below shows all the major fast food chains’ logos:

Source: Rockwell FCS

From an investment point of view, about 50 of these firms trade on the NYSE and NASDAQ. While the S&P 500 is in a bear market, McDonald’s(MCD) is up by 2.4% year-to-date and closed at $275 on Friday. When the market takes a deep dive investors can scoop up some of the names selectively.

Disclosure: No positions

Two Charts on Global Renewable Energy Transition

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The world continues to depend on coal, oil and gas as the primary sources for energy. Though the share of renewable energy sources is increasing it is still under 40% at a global level. Coal is the dirtiest form of energy source and fossil fuels like natural gas and oil are not the cleanest either. The global transition to majority renewable energy sources will be a long and hard slog and will take decades.

Global Share of Electricity Mix:

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Source: Renewable energy transition in 5 charts by Ajit Niranjan, Deutsche Welle

Global Primary Energy Consumption by Source:

Source: 4 new charts on renewable energy stocks by Truman, Genuine Impact Newsletter, Substack

More charts in the above linked articles are worth a look.

Overview of Select FTSE Indices: Infographic

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The benchmark index of the UK equity market is the FTSE 100 Index. This index is comprised of the 100 blue chip companies on the London Stock Exchange and is dominated by oil majors like Shell plc(SHEL) and BP(BP), banks (HSBC), drug firms (Astrazeneca – AZN) and consumer staple giants like Unilever (UL). As such, the FTSE 100 is not a true representation of the UK economy. Since many of the FTSE 100 firms generate a significant portion of their revenues overseas the performance of the index is dependent on the global economy than the domestic economy.

The FTSE 250 is a mid-cap index which is better gauge of the British economy. However this index is rarely mentioned in the media and is not as popular as the FTSE 100. There are many other indices that the index provider FTSE Russell has created. Some of the top ones are listed in the infographic below:

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Source: Quid Stuff

The following chart shows the total return of the FTSE 100 and FTSE 250 indices since 2012:

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Source: FTSERussell

Disclosure: No positions

Two Charts on Inequality in the US

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Inequality is the highest in the United States among the developed countries. According to data released by Census Bureau released in September income inequality grew in the US in 2021 for the first time in a decade. Income and Wealth inequality is usually higher in emerging and frontier countries. However similar situation has been prevalent in the US as well for years.

The following chart shows how wide the gap is between the rich and the working and poor class in terms of income and wealth:

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The chart below shows a comparison of inequality among select countries:

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Source: Hoarding billionaires stunting global growth by Fatema Z Sumar, Asia Times

On The Dramatic Collapse of Meta Platforms Inc

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Meta Platforms, formerly known as Facebook used to have a market capitalization of over $1 trillion last year. This past Friday the market cap was just over $240 billion !. The collapse of this tech darling which was part of the so-called FANG group, in such as short period is astonishing indeed. In October, Meta (META) lost over 25% of its value in one day after quarterly earnings report. From a peak of $353 the stock price ended up at just over $90 on Friday. Year-to-date the stock has plunged by over 73% as shown in the chart below. As a constituent of the S&P 500 and a popular large-cap tech giant, Meta is a major holding in many mutual funds and ETFs. The dramatic fall will hurt them as well.

Meta’s YTD return:

Source: Google Finance

Meta’s 5-year return:

Source: Google Finance

I came across an excellent piece by Renaud Foucart at Asia Times on the decline of Meta. The following is a brief excerpt from the article:

Facebook may not be the original social media platform but it has stood the test of time – until recently.

Meta, the company that owns Facebook, Instagram and WhatsApp, saw its value plummet by around US$80 billion in just one day at the end of October, after its third-quarter profits halved amid the global slowdown. Meta is now valued at around $270 billion compared with more than $1 trillion last year.

Several issues have caused investors to turn away from the social media giant, including falling advertising revenue, a conflict with Apple over its app store charging policy, and competition for younger audiences from newer platforms such as TikTok.

Meta’s chief executive Mark Zuckerberg has also used his majority control to double down on his ambitions for the “metaverse”, a virtual reality project on which he has already spent more than $100 billion – with questionable results according to initial investor and media reaction. Zuckerberg has promised even more investment in the metaverse next year.

Source: New era upside of Meta’s share price collapse, Asia Times

The full article is worth a read.

Meta is basically an advertisement company that promotes itself as some kind of social do-gooder. It needs millions of people on its platform posting content with which it entices advertisers. So it is no surprise that investors bid up to high valuations only to realize the future is not so rosy after all. Accordingly they have re-priced the stock. Only time will tell if Meta’s stock is worth $90 or $10.

Disclosure: No positions