Which Restaurant Category Should You Invest In?

Restaurants make a LOT of money - consumers spend $683.4 billion each year on restaurants. As the world evolves, consumers interests and habits change. People express these changes with their wallets...how is that affecting the restaurant industry?

We created mini-indices for Casual Dining, Fast Casual and QSR segments. Here's what you'll find:

 

1. Casual Dining

google.com/finance

google.com/finance

Casual Dining has been facing substantial challenges over the past few years as consumers wallets start to shrink and people move towards more affordable and high quality options that the Fast Casual segment has worked hard to create. As you can see above, over the past 12 months, the Casual Dining index trades lower than the S&P making it a bad trailing investment and perhaps a buy?

 

2. Fast Casual

google.com/finance

google.com/finance

The Fast Casual segment has effectively reinvented the dining experience by providing higher quality food at slightly higher prices than Quick Serve (QSR) restaurants. The darling of the Fast Casual Segment is Chipotle, which is up 1500% since it's IPO in early 2006. As you can see, Fast Casual stocks have been on a tear as investor confidence is high in the concepts ability to take more market share and continue to grow.

 

3. QSR

google.com/finance

google.com/finance

The QSR segment has been the one most heavily criticized over the past decade. Once heralded for their industrious attitude and incredible ability to serve more food faster, food quality and health have put QSR brands in the crosshairs of public media and made consumers weary of eating too many meals at QSR brands. That said, brands have adapted with new menu offerings and stronger focus on core customers. As you can see, QSR restaurants had a big quarter in Q2 2014, giving them the slight edge over the S&P 500.

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