Spotting the Winners: McDonald’s (NYSE:MCD) and Traditional Fast Food Stocks in Q2

The end of an earnings season can be a great opportunity to discover new stocks and assess how companies are handling the current economic environment. Let’s take a look at how McDonald’s (NYSE:MCD) and other traditional fast-food stocks performed in the second quarter.

Traditional fast food restaurants are known for their speed and convenience, offering menus filled with familiar, affordable dishes. Their on-the-go reputation makes them popular destinations for individuals and families in need of a quick meal. However, this category of restaurants battles the perception that their dishes are unhealthy and made with substandard ingredients, a battle that is especially relevant today given consumers’ growing focus on health and wellness.

The 14 traditional fast-food stocks we track had a mixed second quarter. Overall, revenue was in line with analyst consensus estimates.

Inflation has been moving toward the Fed’s 2% target by the end of 2023, leading to strong stock market performance. In contrast, 2024 has been a more eventful year, with the market swinging between optimism and pessimism around rate cuts and inflation. Fortunately, traditional fast food stocks have held up well, with share prices up 7.9% on average since the last financial results.

McDonald’s (NYSE:MCD)

Arguably one of the most iconic brands in the world, McDonald’s (NYSE: MCD) is a fast food giant known for its convenience, value and wide assortment of menu items.

McDonald’s reported revenue of $6.49 billion, flat from a year earlier. That was 2.1% below analysts’ expectations. Overall, it was a mixed quarter for the company, with gross margin significantly above analysts’ estimates but earnings below analysts’ estimates.

“We believe Accelerating the Arches is the right strategy for our business and, as consumers become more discerning in their spending, we are focused on exceptional execution in delivering reliable, everyday value and accelerating strategic growth drivers like chicken and loyalty,” said Chairman and CEO Chris Kempczinski.

Interestingly, the stock is up 9.3% since the earnings release and is currently trading at $275.45.

Is now the time to buy McDonald’s? Get our full financial analysis for free here.

Best Q2: El Pollo Loco (NASDAQ:LOCO)

With a name that translates to “The Crazy Chicken,” El Pollo Loco (NASDAQ: LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that originated in the coastal city of Sinaloa, Mexico.

El Pollo Loco reported revenue of $122.2 million, flat from a year earlier, beating analysts’ expectations by 1.5%. It was a solid quarter for the company, with an impressive gross margin beat and a decent profit beat.

The market seems pleased with the results as the stock is up 11.3% since the earnings release. It is currently trading at $13.20.

Is now the time to buy El Pollo Loco? Access our full financial analysis here, it’s free.

Slowest Q2: Starbucks (NASDAQ: SBUX)

Founded by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a world-renowned coffeehouse chain offering a wide selection of high-quality coffee, beverages and food products.

Starbucks reported revenue of $9.11 billion, flat from a year earlier and missing analysts’ expectations by 1.5%. It was a weak quarter for the company, with gross margin and earnings falling short of analysts’ estimates.

Interestingly, the stock is up 24.9% since the earnings release and is currently trading at $94.82.

Read our full analysis of Starbucks’ results here.

Arcos Dorados (NYSE:ARCO)

Translated as “Golden Arches” in Spanish, Arcos Dorados (NYSE: ARCO) is the master franchisee of the McDonald’s brand in Latin America and the Caribbean, responsible for its operations and growth in more than 20 countries.

Arcos Dorados reported revenue of $1.11 billion, up 6.8% from a year earlier and beating analysts’ expectations by 5%. Looking back, it was a mixed quarter for the company, with earnings slightly above analysts’ estimates but gross margin below analysts’ estimates.

Arcos Dorados was the best performer among its peers, beating analysts’ expectations. The stock has fallen 5.3% since the release of the report and is currently trading at $9.57.

Read our full, actionable report on Arcos Dorados here, it’s free.

Portillo (NASDAQ:PTLO)

Founded in 1963 as a hot dog stand in Chicago, Portillo’s (NASDAQ: PTLO) is a casual dining restaurant chain serving Chicago-style hot dogs and beef sandwiches along with fries and shakes.

Portillo reported revenue of $181.9 million, up 7.5% from a year earlier and 1.4% below analyst expectations. Overall, it was a weaker quarter for the company, with gross margin and earnings falling short of analyst estimates.

The stock is up 36.1% since the report and is currently trading at $12.10.

Read our full, actionable report on Portillo here, it’s free.

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