Forgive Scott Rothbort of the Restaurant and Food Chain model if he's underwhelmed.
"Burger King BKC is a company with an identity crisis," Rothbort says. "It wants to be new age, higher-quality restaurant chain. But I'm not convinced they're going about it the right way and that they can really pull that off."
It's a tough position for CEO Daniel Schwartz, Rothbort says. The privately held chains like Five Guys Burgers & Fries, Smashbuger and In-n-Out are taking market share offering hand-crafted burgers.
To counter, Burger King has a new menu. And it plans to offer up more free range meat options and cage-free eggs.
"But theirs is a high-volume, low-margin business, he says. "And if they want to start selling higher-priced, free-range meats, they are going to have to raise prices. And people are going to start asking why they are even coming to Burger King."
The Mayor McCheese of the industry remains McDonald's MCD, one of Rothbort's long-term holdings. He sees Mickey D's shares moving mostly sideways the rest of the year, as he expects continued growth challenges in Europe. But he says McDonald's has "walked the line," offering popular salads, wrap sandwiches, better desserts, and its high-quality McCafe drinks, all while keeping prices in check.
"Burger King doesn't have the right internal structure to move ahead, Rothbort says. "I think they'll be nip-and-tuck-with Wendy's WEN going forward." Their menus aren't exciting. Their marketing is not great. And the company has no cohesive international expansion plan."
Here are some of Rothbort's latest thoughts on the restaurant stocks.
His long-term favorites, and ones he still considers core holdings in his model include:
Chipotle Mexican Grill CMG: He calls it one of the best chain restaurants and one of the fastest-growing ones out there.
Buffalo Wild Wings BWLD: It's his largest holding. What started as a wings and beer destination for college kids will remain a destination for sports enthusiasts, he says.
Panera Bread PNRA: Rothbort says it continues to offer up the fresh menu items that appeal to customers, as well as fast growth for shareholders.
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