In the ongoing battle of fast-food giants, the fight seems to be for second place. Nobody is expected to beat McDonald’s for the top spot, but the news this week was former second-place holder Burger King (which announced this week it will go public, again) has been demoted to number three behind Wendy’s for the first time since Wendy’s opened in 1969, according to food industry research firm Technomic, Inc. in a recent article in TIMEBusiness: (http://business.time.com/2012/03/19/wendys-unseats-burger-king-as-second-largest-hamburger-chain/?iid=biz-main-mostpop1#ixzz1qEPd41Vp) .
While these fast food behemoths are too big for our radar, there are several small-cap restaurant companies that are serving up opportunities for investors, along with their traditional fare. Some are major franchisees of the bigger fast-food names, while others are more regional specialty food shops with recognizable names like IHOP and Applebee’s.
Please do your own diligence. We do not recommend stocks, nor are we financial advisors. We do not own the shares of any companies in this article.
Syracuse, NY-based Carrols Restaurant Group (Nasdaq: TAST, http://www.carrols.com/) operates restaurants under the Burger King, Pollo Tropical, and Taco Cabana names. Last week they announced they would buy 278 Burger King outlets in a cash-and-stock deal that will make it the biggest Burger King franchisee in the world. At the close of market April 3, TAST was trading at $15.24, down 24 cents on the day, with a market cap of $353 million.
Spartanburg, NC-based Denny’s Corporation (Nasdaq: DENN, http://www.dannys.com/) operates traditional American-style food restaurants under the Denny’s brand name. With approximately 1,680 restaurants in 50 states and nine countries, Denny’s is the nation’s largest family dining chain (in units). On April 2 DENN closed trading at $4.10, up 4 cents on the day. Their market cap is $389 million, with a 52-week range of $3.10 – $4.55.
Glendale, CA-based DineEquity (NYSE: DIN, http://www.dineequity.com/), which bills itself as the world’s largest casual-dining chain, owns and operates two restaurant concepts: Applebee’s Neighborhood Grill and Bar, or Applebee’s, in the bar and grill segment of the casual dining category of the restaurant industry; and International House of Pancakes, or IHOP, in the family dining category of the restaurant industry. On April 2 DIN closed at $49.42, down 18 cents on the day. DIN has a market cap of $893 million, and a 52-week range of $35.20 – $56.78.
Irving, TX-based CEC Entertainment (NYSE: CEC, http://www.chuckecheese.com/) and its subsidiaries develop, operate, and franchise family dining and entertainment centers under the Chuck E. Cheese name. As of February 29, 2012, it operated 555 Chuck E. Cheese stores located in 48 states and in seven other countries or territories. At the close of market April 3, CEC was trading at $38.09, down 6 cents on the day. Its 52-week range is $25.83 – $42.75, with a market cap of $672 million.
Lakewood, CO-based Einstein Noah Restaurant Corp (Nasdaq: BAGL, http://www.einsteinnoah.com/ ) owns, operates, franchises, or licenses various restaurant concepts primarily under the Einstein Bros. Bagels, Noah’s New York Bagels, Manhattan Bagel Company, and Kettleman Bagel Company brands. BAGL. Its retail system consisted of approximately 773 restaurants in 39 states and the District of Columbia. On April 2 BAGL closed at $15.07, up 15 cents on the day. BAGL has a market cap of $252 million, and a 52-week range of $11.48 – $16.28.