Our Top 3 Restaurant StocksOct 13, 2021
It is no secret that restaurants were one of the hardest hit sectors in the economy during the pandemic. But the stats on how hard they were hit are frankly mind-blowing. Here's a list of some of the most shocking numbers:
- 90,000 restaurants closed permanently during the pandemic in the US alone. 4% of US GDP is attributed to the food and restaurant industry and this number represents a massive amount of that industry going away almost overnight (it is estimated that $290B in revenue was lost from 2020-2021).
- The industry employs 11,000,000 people and 16,000,000 total including other parts of the food supply change. Not only will it hurt the industry but it also put a ton of people out of work (unemployment rate is twice the national average) - thereby ruining lives and further hurting small businesses.
- In order to combat the issues many government rolled out grants to try and help restaurants by providing them with funds. As good as their intentions were, distributing the funds was another whole dilemma. The funds quickly became exhausted in many cities and many restaurants suffered because they were not able to claim the proceeds. With fall and winter around the corner, many restaurant owners are scared it'll mess things up again especially with the variants floating around.
As terrible as all this is, it fundamentally changed the face of the food industry forever. And guess what? Big chains and corporate arms were able to profit while local businesses got crushed.
This is large part happened because chains were able to adapt quickly because they invested in technology whereas local restaurants, with smaller amounts of cash reserves, were not able to overcome the challenges as fast. Pair that with supply chain issues and spikes in commodity prices, and local business suffered hard. And the scary thing is these challenges are far from over.
Therefore as investors, we need to be ready to adapt as quickly as possible to the changing dynamics across the globe.
So we created the list below to show which companies have and will continue to benefit as much as possible from the dynamics currently in play! This is a can't miss list for investors eyeing opportunities in the food & beverage industry!
Our Top 3 Restaurants Stocks:
1) Yum! Brands, Inc. (YUM)
If you're not familiar with YUM they are behind the brands such as KFC, Pizza Hut, Taco Bell, The Habit Burger Grill, and WingStreet worldwide. They did over $5.6B in revenue last year and are an absolute behemoth in the food and beverage industry!
Similar to the stock below, YUM is one of our top food stocks as they can manipulate prices, control the supply chain and hedge inflation better than almost anyone else can. Similar to the other stocks YUM is a safe pick that pays out a dividend with more growth potential than the stock below.
But what makes YUM so different is their ability to hedge any trouble in China.
Via their China operations - YUM China, YUM is able to avoid a lot of pain other companies like Starbucks are feeling. YUM has a solid relationship with the growing superpower and should continue to be able to assert their global dominance for years to come.
We therefore have given YUM's price target 18% upside to where it currently trades.