Is investing in a fast food chain a reliable use of my time and money? I realize that fast food chains like McDonald's and Burger King are mature and have pretty much hit their peak barring new innovations they may introduce, but what about newer chains? I would think the type of food, the quality and taste, and the competitors it may have will play a factor. Are there any other pointers someone can give me if i do decide to try this investment, things I should watch for?
This market is pretty saturated by McDonald's, but you can always try depending on your country. I myself have got 6 different fast food chains in my city, and they do pretty well in spite of the fierce competition.
I think it's a matter of principle, if you agree with what they sell why not, it's a franchise that will most likely give money, depending on the area. A new company? I would think twice.
I don't know, I can imagine ealy investors in Chipotle are pretty happy right now I guess you just don't know which chains will take off and do well. I wonder if you could find a local chain that is really popular in your area and find out whether they are going to go wider. There's a gournet grocery/home goods store in my area that is super popular and has just opened 2 new locations outside of this immediate area. I'd like to see how they do, and see if the company goes public.
There are a handful of fast food and fast casual chains you could invest in and potentially make some big profits. Chipotle is the most recent example I can think of involving a company in that sector that rose to the top. I wouldn't invest in McDonald's or the other major fast food chains, though. Look for ones that are still growing and that offer the potential for some big gains. You might not find the next Chipotle, but you can still make some money on fast food.
I don't know if it would be a good idea to buy much CMG at this level - I'd buy it lightly if at all and dollar cost average... like maybe a share here, a share there on pullbacks. I actually have had a put on it for a while, but it just keeps going up. I also like QFC - they've recently pulled back a good 6% in the past month or so.
I'd be a little nervous buying CMG right now too. Great business, but it just seems like it might be priced for perfection up here. I would at least wait a bit and see what the price action looks like over the next few weeks. This is a volatile stock, and you'll have other chances to get long, maybe at a much better price.
Fast food is the best type of restaurant to invest. They have little chance of failure compared to other chains since people can always afford their food. As long as people enjoy their food and management is great, they'll have no problem.
I think as long as it is an established chain like McDonalds then it is alright. Of course there is Yum! Brands which owns KFC , Taco Bell and Pizza Hut.
Peter Lynch's book - One up on Wall Street - has quite a bit on this. He shares how he discovered some good investments in this area, and how he went about analysing if the stocks were really worth it. Hope this helps anyone....
