Fast food chains see mixed inventory changes

Los Angeles is home to a number of publicly traded fast-food chains. But despite the rising food and labor costs they’ve faced, stock prices for those companies have been mixed so far this year.

THE Cheesecake Factory Inc. in Calabasas has seen its stock rise 11% this year, from an adjusted close of $33.86 in January to a close of $37.50 on July 9.

And Sweetgreen Inc.The West Adams-based health food restaurant chain has posted a 121% increase since the beginning of the year, when its stock closed at $11.07 on Jan. 2 and closed last week at $24.41.

In the meantime, Dine Brands Global Inc.The Pasadena-based owner of IHOP and Applebee’s Neighborhood Grill + Bar, saw its stock price drop 34% from an adjusted close of $47.88 on Jan. 2 to a close of $31.43 on July 9.

A decrease was also observed Fat Brands Inc. in Beverly Hills, down 19% from the adjusted close of $5.94 on January 2 to $4.84 on July 9.

Andrew WiederhornPresident of Fat Brands, was indicted in May on federal fraud charges. Wiederhorn, who was chief executive and owner of the restaurant franchisor until he resigned in May last year, was accused of participating in a scheme to conceal $47 million in distributions he received as shareholder loans. The company’s stock price has plummeted since the indictment.

A strong industry

However, the fast food sector constitutes a strong segment of the market.

According to a report last year by Allied Market ResearchThe global fast food market was valued at $124.5 billion in 2022 and is expected to reach $337.8 billion by 2032.

The North American market dominates the fast food sector, with a market share of 45% in 2022.

Consumer tastes, habits and purchasing behavior are changing rapidly in the region, the report says.

“Consumers in the region now favor natural, private label and organically grown foods, which has boosted the market share of fast casual restaurants in North America,” the report adds.

However, he continues, the fastest growing market for fast-casual restaurants during his forecast period from last year to 2032 will be the Asia-Pacific market.

“The rapidly expanding middle class and workforce is a major driver of the growth of the fast food market in Asia Pacific,” the report said. “These restaurant chains maintain a balance between affordability and quality, making them an attractive option for customers in the region.”

Expansion in Asia-Pacific

However, Los Angeles County’s four fast food chains are slow to expand into Asia-Pacific.

Only one company – Cheesecake Factory – has recently opened a new location in this region under a licensing agreement.

But that doesn’t mean others aren’t developing.

Fat Brands, which owns 18 restaurant concepts including Fatburger, Round Table Pizza, Fazoli’s and Twin Peaks, planned to open between 125 and 150 new units this year, a 20% increase from last year.

Soft green Financial director Mitch is back said on a May conference call with analysts to discuss first-quarter results that the company plans to open between 23 and 27 new restaurants this year, about seven of which will contain the Infinite Kitchen.

Infinite Kitchen is the automated service that Sweetgreen launched a little over a year ago with a store in Naperville, Illinois. It also has an automated kitchen in Huntington Beach.

Dine Brands also has its own growth plans, although they are a little more modest.

John PeytonApplebee’s, the restaurant franchisor’s chief executive, said on a May 8 conference call with analysts to discuss its fiscal first-quarter financial results that during the quarter, Applebee’s had national net closures of five stores and that the company was on track to meet its national guidance of 25 to 35 closures. This year.

During the first quarter, IHOP opened five restaurants nationally and closed nine, for a net closure of four locations, Peyton said.

“As is typical of IHOP’s development cycle, we are seeing more closures early in the year and new openings concentrated in the second half of the year,” he added. “We remain in line with our full-year guidance of 15 to 25 new domestic restaurants.”