Tuesday, October 6, 2009

Big Mac Investing - How to Consider the Fast Food Market

Rummaging through some Economist archives recently, a reminder arose of the Big Mac Index – a novel way to explain currency trading. The world of fast food has been an intriguing one since the start of the recession, with consumers trading in sit down meals for dollar menus at quick service restaurants (QSRs) such as McDonalds (NYSE:MCD), Burger King (NYSE:BKC), and Taco Bell (NYSE:YUM). The Big Mac Index is an interesting look into how valuable a double patty is across countries, but sales of these Big Macs and other QSRs sandwiches have been an interesting case. Sales have not grown in every quarter at these QSRs, but certainly have not declined as far as other segments.

Yum! Brands, owners of the Taco Bell franchise, released a raise in their earnings forecast earlier this week. Do not look to this as a clear indication that consumers are ready to fall back into stuffing their faces, however. In a non-robust analysis below, you will find how to use search to analyze which of the firms in the QSR space are outperforming each other in a given geography (the United States in this case).

Searches for the nearest fast food restaurant location have exploded over the course of the recession. Locations are important to factor into your search analysis as they are a clear indicator of interest (while a simple brand search may be the direct product of advertising response).

Sales at these QSRs have not grown as strongly as the charts indicate, though, mainly driven by the QSRs' focus on lower priced meals. Taking a look at these searches in the US, though, indicates that McDonalds is far and away the winner of the fast food battle.

The Yum! increased earnings story becomes more apparent in search when taking a look into their other key brand, Pizza Hut: consumers are ready to get back into seats and sit down with their families.

The interest in locations has exploded over the course of the past year and a half due in large part to cost concerns of transportation. When holding the location constant as we have here, however, we are able to get a proxy of the US consumer’s intent to visit these dining establishments.

Moral of the story: Yum! Brands has seen a strong interest lift as consumers want to find their nearest Pizza Hut; McDonalds has seen a strong interest increase as well, but not all fast food restaurants are going to come out clear winners. Burger King is at the bottom of this competition, with a concavity inflection in their searches taking place in the 2nd half of this year.

26 comments:

  1. I think ther are a couple more variables you need to look at here 1) how were these searches made? It's curious to me that there was a pretty constant increase in these search terms starting around the middle of 2008. That's exacly when the iPhone 3G was released and there's a fair chance that someone wondering around hungry is more likely to search for the location of a QSR than someone planted on their couch. 2) based on the regional data and the type of consumer that would be looking for a QSR is it possible that in some places there was either an associated increase in total connectivity or a decrease in the cost of connectivity?

    ReplyDelete
  2. I agree that the iPhone could be a large driver of the physical increase in searches, but what's more interesting here is the proportion relative to each other that the searches have grown.
    I'm not sure that I understand the 2nd question; are you suggesting that there is a location bias to the data? If so, it is possible, but the scale across the country should quiet that noise. Looking at one state at a time could give you insight into those kinds of shifts.

    ReplyDelete
  3. Im no expert, but I believe you just made an excellent point. You certainly fully understand what youre speaking about, and I can truly get behind that. Best Forex Signals

    ReplyDelete
  4. While most who are investing in the financial exchange need an agent, Forex investing is for the most part done on the web with no merchant being associated with you. Aussie brokers forex

    ReplyDelete
  5. Great things you’ve always shared with us. Just keep writing this kind of posts.The time which was wasted in traveling for tuition now it can be used for studies.Thanks best rice brand

    ReplyDelete

  6. Forex and Financial Markets is not a place where all traders are going to make easy profit. Only about 10% of traders around the world can make stable profit all the time, 90% of traders will lose some or all their Portfolios at the end. This is the ugly truth you must believe in, which is why we called this market by "The Legal Casino"
    Forex Managed Accounts

    ReplyDelete
  7. Dallas also inked defensive end DeMarcus Lawrence and linebacker Jaylon Smith to lucrative extensions in the last year. super bowl 2020 stream

    ReplyDelete
  8. Busch has had plenty of success at this track over the years. In fact, the 41-year-old won the Daytona 500 in 2017 and has recorded 18 career top-10 finishes at Daytona International Speedway. Busch earned a top-10 finish in his last start at Daytona and led for at least eight laps in two of his last four starts at this track. Plus, Busch finished last season with three top-10 finishes in the final five races. With so much success at Daytona International Speedway throughout his career, you can confidently lock him in at 18-1 Daytona 500 odds and look for a chance at a big payout.
    Daytona 2020 Live Stream

    ReplyDelete
  9. "I'm very excited for this fight and thankful to my team for giving me this great opportunity," said Matias. "Just like all of my other fights, I'm going to train to my maximum level, because no matter who the opponent is, we're all chasing the same dream
    Wilder vs Fury Live Streaming

    ReplyDelete
  10. There are many Bitcoin supporters who believe that digital currency is the future. ... Like any other asset, the principle of buying low and selling high applies to bitcoins. Bitcoin investment

    ReplyDelete
  11. Eyal Nachum is a fintech guru and a director at Bruc Bond. Eyal is the architect of the software that SMEs use to do cross-border payments.

    ReplyDelete
  12. Bruc Bond endeavor to lead the financial sector with sustainability, customizable product offering, and open communication. At Bruc Bond we aim to make 21st century banking straightforward, simple, and transparent.

    ReplyDelete
  13. Bruc Bond endeavor to lead the financial sector with sustainability, customizable product offering, and open communication. At Bruc Bond we aim to make 21st century banking straightforward, simple, and transparent.

    ReplyDelete
  14. Mobile financial is a big component of the fintech market. Worldwide of personal money, consumers have increasingly demanded easy electronic accessibility to their savings account, especially on a mobile device. Most significant banks currently provide some type of mobile financial feature, particularly with the increase of neobanks.

    B2B Fintech startup

    ReplyDelete
  15. Amazing! Its really awesome article, I have got much clear idea
    regarding from this article.
    Custom Stickers UK
    Printed Labels

    NewYork Instant Printing
    Cute Happy Birthday Wishes

    ReplyDelete
  16. This is actually the kind of information I have been trying to find. Thank you for writing this information. Pillow boxes

    ReplyDelete
  17. Excellent article. Keep posting information like this on your site... traveling to turkey from Canada for tourism or trade should purchase an e-visa prior to entering the country. Canadians can also obtain a visa for turkey from Canada in some international airports. If you plan to study or work in Turkey, you must obtain a visa at a Turkish visa portal before arriving in Turkey.

    ReplyDelete
  18. Nice post. Thank you for this work. The travelers need to apply Kenya evisa application through online visa application. Check the details and read the guidelines before you fill up the application form.

    ReplyDelete
  19. My goodness, Your post is so relatable you are really grabbing attention with this article. I suggest to the reader that if you want to explore India’s beauty, culture, tourist place or meet with family , friends and relatives, then applying for an e tourist visa India is an online authorization for the foreigner.

    ReplyDelete
  20. This article is really very helpful for me and I really appreciate you for sharing it with me....Indian visa online for US citizens, it is electronic India Visa Online that allows foreign visitors to come to India for five major purposes, tourism/recreational short term courses, business, medical trips or conferences.

    ReplyDelete
  21. Harrah's Cherokee Casino & Hotel - MapYRO
    Find 공주 출장마사지 out more about 서산 출장안마 Harrah's Cherokee 광명 출장안마 Casino & 청주 출장샵 Hotel 김포 출장안마 in Cherokee, NC and other nearby casinos. Harrah's Cherokee Casino & Hotel has 542 slots

    ReplyDelete
  22. I read this article, it is really informative. Your way of writing and clarifying things is very impressive..India restores e Tourist visa with immediate effect 2022, you can apply online India restores long term e tourist visa via India evisa website.

    ReplyDelete
  23. This is really a very nice blog, I really appreciate all your efforts, thank you so much for sharing this valuable information with all of us. If you are willing to travel to Pakistan, everything is online nowadays. Now you can apply for Pakistan tourist visa. No need to visit any embassy & consulate. You can check on our website.

    ReplyDelete
  24. The best trades aren’t available every hour or even every day, so sometimes you might have to wait for days or even weeks for Accurate Trading Signals


    ReplyDelete

Wikinvest Wire