12 MONTH FCN ON US MCD, SBUX, YUM, QSR, 8% p.a., Strike 90%, KO Monthly 100%, EKI 78%

Beneficiaries of Firm Consumer Spending

· The strength in consumer spending, together with falling COVID-19 infections and recovering consumer confidence bode well for a pickup in economic activity in the final three months of the year, benefiting consumer discretionary stocks – in particular restaurant stocks as dining-in restrictions are lifted.

· McDonald’s (MCD): MCD is the world’s largest restaurant chain by revenue. Unparallel scale and agility has allowed MCD to deliver continued growth in spite of the pandemic across an omnichannel experience. In 3Q, global comparable sales increased 10% over 2019, reflecting positive growth across all segments.

· Starbucks (SBUX): SBUX is the leading global coffee chain with a market share of close to 40% in the US. US same-store sales jumped 22% in 3Q. Stores saw higher traffic and customers spent more on pricier cold drinks, which made up 75% of US sales, and food, which saw sales climb 35%. Its best-in-class digital and loyalty platform -24.8m loyalty members and mobile orders accounting for just over half of US transactions, will continue to provide a competitive advantage.

· Yum! Brands (YUM): Yum! Brands is the owner of the KFC (50% of profits), Taco Bell (31%), Pizza Hut (17%) brands. Its recently announced 3Q results, led by record-breaking unit development and sustained momentum in digital sales, are a testament to the strength of its brands and the commitment and capability of its franchise partners.

· Restaurant Brands International (QSR): QSR is the owner of fast food restaurant chain Burger King, Canadian coffee chain Tim Hortons, and fried chicken chain Popeyes Louisiana Kitchen. The group aims to grow its number of restaurants to 40,000 from the current 27,667 restaurants in 8-10 years


WEEKLY INVESTMENT IDEAS - 20211108 - MCD YUM SBUX QSR FCN
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