Will Quick Service Restaurants Success Last?

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In a report published Monday, Morgan Stanley analyst John Glass previewed the Quick Service Restaurant (QSR) industry as many restaurant operators are set to report their quarterly results in the coming weeks. According to Glass, sandwich sales (the segment's largest category) were up an estimated 2.7 percent (excluding
McDonald's CorporationMCD
) in the first quarter. The analyst added that this figure isn't quite as strong as the 3.2 percent growth seen in the fourth quarter, it nevertheless continues the momentum seen throughout 2014. However, Glass noted that QSR valuations are higher than casual dining restaurants with an average P/E of 28.5x. As such, fast food restaurants are trading around 20 percent above their three and five year historical average. The analyst did note that there are several QSRs that are trading at a lower premium versus the prior three years, including
Chipotle Mexican Grill, Inc.CMG
,
Dunkin Brands Group IncDNKN
,
Panera Bread CoPNRA
,
Starbucks Corporation
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SBUX
and
Yum! Brands, Inc.YUM
Here is a schedule of several key QSR earnings releases:
  • Yum! Brands will report its first quarter results on April 21.
  • Chipotle Mexican Grill will report its first quarter results on April 21.
  • McDonald's will report its first quarter results on April 22.
  • Dunkin Brands is projected to report its first quarter results on April 23.
  • Starbucks will report its second quarter results on April 23.
  • Panera Bread will report its first quarter results on April 28.
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Posted In: Analyst ColorAnalyst RatingsCasual DiningConsumer DiscretionaryFast FoodJohn GlassMorgan StanleyQuick Service RestaurantsRestaurantsSandwich Sales
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