Restaurant Stocks: Global Insights

Global Restaurant Stocks: Largest Publicly Traded Foodservice Companies in the World

Some of the most prominent foodservice companies in the world also have a dominant presence on global stock markets.

We explored the largest ten stock exchanges for the industry and found that in eight countries the leaders command more than half of foodservice market capitalization. The two exceptions are the U.S. and Japan. The U.S. leader, McDonald‘s commands 40% of the market cap. In Japan, the leader has a 14% share of the market cap. The consequences of this crisis will be global, and the transformation will be long-lasting — benefiting those ready to make razor-sharp strategic capital allocations.

Global Public Restaurant Companies

  • U.S. Restaurant Stocks: Market capitalization reached $306b in March 2020 for foodservice companies in the NYSE and Nasdaq. McDonald’s is the leading foodservice stock, representing 40% of the market cap.
  • Japan Restaurant Stocks: the Tokyo Stock Exchange is the second-largest public market when it comes to restaurant stocks. The market cap is $41b and the largest restaurant chain traded in this market is McDonald’s Holdings Company Japan.
  • UK Restaurant Stocks: Foodservice stocks in the United Kingdom have a market cap of $33b. The largest company is contract-foodservice Compass Group.
  • Canada Restaurant Stocks: the combined market cap for public restaurants in Canada is $33b. The Restaurant Brands International stock represents 58% of that.
  • Hong Kong Restaurant Stocks: Market cap of $24b. Haidilao International Holding is the leader with a capitalization of $21b.
  • Australia Restaurant Stocks: Market cap of $3b. The leader foodservice company is Domino’s Pizza Enterprises Limited with 86% of the market cap.
  • India Restaurant Stocks: In India, the market cap for restaurants is $2b. The leader company is Jubilant Foodworks Limited.
  • China Restaurant Stocks: China restaurants have a market cap of $2b. Guangzhou Restaurant Group leads foodservice in the public markets.
  • Philippines Restaurant Stocks: Market cap of $2b. The leading publicly traded restaurant chain is Jollibee Foods.
  • Saudi Arabia Restaurant Stocks: Market cap of $2b. The leader is Saudi Airlines Catering with $1.5b in shares.

U.S. Restaurant Stocks

Restaurant stocks in the U.S. represent $306b in market capitalization (as of March 2020). McDonald’s and Starbucks are the largest companies, with more than 60% of the overall market cap.

  • Restaurant Stocks Rebound: Volatility in stock markets has peaked in recent weeks due to the COVID-19 crisis. Restaurant stocks have been no exception, bouncing back better than expected given the drop in sales for the second quarter of the year. In the U.S., publicly traded stocks had lost $146b (more than a third of February’s value) with the market crash by March 23rd, to then bounce back gaining $90b in less than a month. The capital injected into the economy would certainly explain part of this recovery, but investors may not be fully accounting for the revenue loss and potential for 2020 EBITDA to be washed down.

United States Restaurant Stocks Market Capitalization

  • Foodservice Publicly Traded Leaders: Even in volatile markets, there are two clear leaders among foodservice public companies. McDonald’s and Starbucks command 63% of the market capitalization of U.S. public companies and over-the-counter stocks – more than $260b.These happen to be two of the restaurant companies that have most successfully harnessed technology to restore/maintain relevance and build incredible value. Knowing that restaurant technologies matter is less useful than knowing which technologies can improve customer experience and loyalty while also increasing efficiency and building up the bottom line.

U.S. Restaurant Stock Market Cap

  • The top ten restaurant stocks in the U.S. have a total market capitalization of $347b with few long-term declines in stock prices. More than half of the top ten by size are single brand portfolios.
    • McDonald’s Stock: QSR leader McDonald’s stock price has increased by 80% in the last five years, reaching $176 per share as of May 2020 and a market cap of $131b
    • Starbucks Stock: Coffee leader Starbucks stock price has grown by 50% in the last five years, and now sits at $74 per share and a market capitalization of close to $87b. This is one of the major restaurant stocks in the U.S.
    • Chipotle Stock: Fast-casual Chipotle stock price is $929 per share, among the highest in the industry. Chipotle’s stock price grew by 46% in the last five years.
    • Yum! Stock: Yum! Brands stock price has grown by 29% in the last five years ($84 as of May 2020). Yum! Brands market cap is $25b.
    • Domino’s Stock: Pizza leader Domino’s stock price is $378, and grew by 247% in the last five years (among the best stocks globally, largely outperforming the S&P 500 and other U.S. restaurant stock prices)
    • Darden Stock: Casual-dining Darden stock price change was +23% in the last five years, reaching $70 per share in 2020.
    • Wendy’s Stock: QSR Wendy’s stock price increased by 86% in the last five years, reaching a price of $21 per share. Wendy’s market cap is $4.6b
    • Dunkin’ Stock: There are two coffee foodservice companies trading in the U.S. stock exchanges. Dunkin’ stock price increased by 23% in the last five years and sits at $63 per share.
Ticker
Company
Closing Price
Market Cap
Five-Year Share Price %
MCD
McDonald’s Corp
$176.54
$131.3b
80%
SBUX
Starbucks Corporation
$74.35
$86.9b
50%
CMG
Chipotle Mexican Grill, Inc.
$929.85
$25.9b
46%
YUM
Yum! Brands, Inc.
$84.00
$25.3b
29%
YUMC
Yum China Holdings Inc.
$48.97
$18.4b
N/A
DPZ
Domino’s Pizza, Inc.
$377.94
$14.8b
247%
DRI
Darden Restaurants, Inc.
$70.32
$9.1b
23%
ARMK
Aramark
$23.05
$5.8b
-26%
DNKN
Dunkin Brands Group Inc.
$63.62
$5.2b
23%
WEN
Wendys Co
$20.78
$4.6b
86%

*Last Updated as of May 2020

  • Restaurant Stocks Leaders by Category: Here’s another fascinating proof point that casual dining is ripe for M&A and consolidation. Every other foodservice category has a clear market share leader with one exception – casual dining. While the average market cap share by category is 79%, the casual dining leader share is 43%. In developed markets like the U.S., large chains have mostly reached the limits of organic growth, which means acquisitions are one of the best ways to continue to add market share and value. For private equity, the steady growth of the restaurant industry combined with the remarkable valuations assigned to the most innovative players makes foodservice an attractive space. As more and more investors become active in the industry, they’re relying on experts to help find and evaluate targets as well as create roadmaps to exit that mitigate risk and maximize value. Indeed, many of the most successful practitioners in M&A recommend bringing in advisors with industry-specific expertise during the due diligence phase.

US Stock Restaurant Leaders by Market Capitalization

  • Restaurant Stocks by Market Capitalization Classification: The restaurant industry overall grows at approximately the rate of population, GDP, and share of consumer discretionary spend. While the growth of the industry overall is relatively predictable, there’s almost nowhere in the world where someone isn’t gaining market share at someone else’s expense.  And while many shareholders only pay attention to major stocks, in the last year, foodservice Micro-Caps trading in the U.S. have grown at a median of 7.5%–51% faster than Small Cap Stocks. Mid Cap restaurant stocks have grown by a median 7.2% year-over-year and large caps were at a 6.3% growth rate. For companies of all sizes, corporate intelligence for where things are headed and how to harness both headwinds and tailwinds for improved future performance pays off in terms of growth and valuation.

European Restaurant Stocks

  • Contract Foodservice Stocks: Some of the largest foodservice companies in the world are those that many consumers wouldn’t recognize the brand names of. Compass, Aramark, and Sodexo are all leading contract foodservice operators which service airports, hospitals, stadiums, and arenas around the world. In the London Stock Exchange, for instance, contract foodservice reaches $49b in enterprise value — more than half of the EV of all publicly traded restaurants in the country. Oftentimes, this is an overlooked segment when determining the total addressable market for an investment or expansion opportunity.

Restaurant Stocks in the United Kingdom

  • Revenue Growth Stagnates for European Restaurant Stocks: Revenue is forecasted to stagnate among public European restaurants in 2019 — the median growth based on analysts’ consensus is projected at 0%. That said, top-quartile performers are expected to grow by at least 7.7% showing that there are winners even in a challenging market. Some of this growth is coming from acquisitions: this is the case, for instance, of The Restaurant Group after the 2018 acquisition of Wagama; and some comes from alternative formats (like meal kit company Marley Spoon). Intelligence about markets serves as a better radar, helping to see further and identify growth paths with more clarity and context.

European Restaurant Stocks 2019 Revenue

  • Compass Group and Sodexo Lead European Stocks: The combined market capitalization of European publicly traded hospitality companies totals $86b, and three-quarters of that figure is commanded by just five companies. Knowing how and where best to place CAPEX dollars to ensure the dominance of your brand and secure your territories (and market share) requires solid plans around strategic capital allocations.

Europe Public Restaurant Market Cap

Emerging Markets Restaurant Stocks

  • Asia Pacific Restaurant Stocks: Publicly traded restaurants in some Asian Pacific emerging markets including Thailand, the Philippines, China, and Indonesia are expected to reach double-digit growth medians in 2019. China, India, and others in the region have some of the lowest chain restaurant penetration levels in the world. These markets pose an opportunity for foodservice brands willing to invest in strategic plans that will secure a successful cross-border expansion. Asian stocks have reached revenue growth rates of a median higher than 10% in Thailand, Philippines, China, and Indonesia as of 2019.

Asia Pacific Restaurant Stocks Revenue Growth

Restaurant Delivery Stocks

  • Publicly traded delivery companies growing faster than restaurants: While the $3.5 trillion global restaurant industry is relatively predictable in terms of growth (it mirrors that of population, inflation, and driven by share of discretionary spend) there have been major shifts in where consumer dollars are being spent. Off-premise consumption is one of these areas, with delivery aggregators growing much faster than restaurants. Among publicly traded companies, delivery providers — like Grubhub, Just Eat, Delivery Hero, and Takeaway.com — are experiencing revenue growth of at least 4x the pace of restaurants (considering their median). For as much as we forecasted where delivery would be today (years ago), the next few years will further accelerate the widening performance gap between the haves and the have nots — those who are looking to and investing in the future compared to those clinging stubbornly to the past.

Grubhub Stock - Just Eat Stock

  • Grubhub Stock: Food delivery aggregators have highlighted the potential success — and value — of new technologies that modernize the foodservice industry. Grubhub’s enterprise value has increased by 170% between 2014 and 2018, more than three times the increase experienced by the seven largest publicly traded foodservice companies in the U.S.

Grubhub Stock

  • Just Eat Stock: The success of food delivery aggregators is a worldwide phenomenon. Among European publicly traded companies, U.K.-based Just Eat saw its enterprise value (EV) double between 2014 and 2018, more than 6x the growth experienced by the eight European foodservice companies with the largest market caps. Other delivery companies with later IPO dates have taken different paths: while the enterprise value of Dutch company Takeaway.com has grown by 140%, Germany’s Delivery Hero has maintained a constant value, in fact losing 2% EV in its first year as a public company.

Just Eat Stock vs Restaurants United Kingdom

Billions Fleeing Public Markets

Since January of 2017, nearly $15b worth of public restaurant stocks in the U.S. delisted, as nine companies left public exchanges for private hands. While the total value and number of global IPOs are increasing, fewer U.S. foodservice companies are going public. The pains of going public these days can be avoided while still gaining funding, as there are trillions in private equity capital ready to be invested in global markets.

Public Restaurants Going Private Stocks Delisted

Relevant Insights to Restaurant Stocks

ABOUT AARON ALLEN & ASSOCIATES

Aaron Allen & Associates works alongside senior executives of the world’s leading foodservice and hospitality companies to help them solve their most complex challenges and achieve their most ambitious aims, specializing in brand strategy, turnarounds, commercial due diligence and value enhancement for leading hospitality companies and private equity firms.

Our clients span six continents and 100+ countries, collectively posting more than $200b in revenue. Across 2,000+ engagements, we’ve worked in nearly every geography, category, cuisine, segment, operating model, ownership type, and phase of the business life cycle.