This post was part of AOL Money & Finance's Best & Worst of 2007. Voting has now closed and readers have chosen old favorite McDonald's as the hottest restaurant chain of the year. Let us know in the comments if you are pleased with this result.
America might as well change its tagline to "The Land of the Free and the Home of the Fast Food." Are we really "brave" any more? Our collective culinary adventures seem to start and end at chipotle peppers. Chipotle, that smokey hot chile whose provenance is deeply American and whose name is synonymous with a whole type of cuisine; in fact, one of the hottest restaurants in the country is named for the spicy stuff.
But it is not Chipotle that is making the splashiest headlines this year; no, it's the oldest and favorite-est of them all, McDonald's (NYSE: MCD). Just take a look at the company's stock over the past year ... three years ... five years ... the charts read like an American Investment Dream success story. The returns, respectively: 41%, 89.6%, 213.4% seem mystical. Is this the same company whose menu items were flopping and service was embarassing, only a few years ago?
It's not. The new McDonald's is the one whose coffee has been deemed better than Starbucks', and who is rolling out lattes and iced coffees to its outlets nationwide next quarter. With the promise of breakfast all day, a third-pounder burger, and a big push into the market of Starbucks-style loiterers (what with wi-fi and better seating planned), McDonald's just keeps getting hotter and hotter.
Chipotle Mexican Grill (NYSE: CMG) has done something I never would have expected; it has transcended the one-hit wonder vibe suggested by its ingredient-focused name. (It's kind of like naming a chain of salad restaurants "Arugula" -- what happens when the ingredient falls out of favor?) But neither the restaurant chain, or the ingredient, show signs of slowing down. As Georges Yared mentioned when calling Chipotle the "next McDonald's," the restaurant's simple concept is its saving grace: healthy, freshly-prepared Mexican food served in a pleasant environment. And so far this year, the stock is up 136%; that is healthy, indeed.
If the food -- or the stock risk -- at Chipotle isn't hot enough for you, check out Buffalo Wild Wings (NASDAQ: BWLD). The restaurants are wildly popular (my husband, a wing fanatic, made these moony eyes I haven't seen since the first time I made him gravy when I mentioned it). And who doesn't like chicken wings, especially when they come in 100 or so varieties? What with low food cost and high customer volume, the restaurants were exploding and the stock was, too, to a high of $46.64 in late June. But things were too good. Jim Cramer worried about the high short interest, analysts started downgrading, advising their clients to take profits, and the stock steadily fell to the high $20s, where it now sits. Analyst consensus is now neutral; though everyone is still eating wings, too much growth can be a frightening thing.
Moe's Southwest Grill is privately-held -- not susceptible to the kind of financial roller coaster as the other restaurants on our list, right? Surprise! Moe's has managed to kick up a little dust with an uneasy relationship with its franchisees, many of which are suing for improper use of advertising dollars and sales proceeds that were slated to be given to a charity. Focus Brands, which operates Carvel and Cinnabon chains, bought Moe's in April 2007 for an undisclosed sum; there were around 360 restaurants at the time of the sale. The menu, on the other hand, is uncontroversial: burritos, fajitas, tacos, quesadillas. Moe's point of differentiation is pop culture references and loud greetings by its employees; is this enough to set it apart in a sea of Tex-Mex cuisine?
Share the reasons for your pick of the hottest restaurant chain in the comments, or let us know about any contenders we overlooked. Also be sure to see the rest of AOL Money & Finance's Best & Worst of 2007.
Reader Comments (Page 1 of 1)
12-02-2007 @ 3:32PM
michael schneider said...
Nobody wanted to buy McDonald's stock when it was trading around $15-- some will remember that even Warren Buffett bought into McDonald's for a short time and then got out for reasons unknown. Now MCD is a hot stock again. McDonald's was among the 1st stocks recommended in our free Barrel View e-mailing at http://www.Barrelomoney.com. We also recommended Coca-Cola around the same time. Both have had good returns.
12-04-2007 @ 3:39AM
Ryan Smith said...
McDonald's stock might be rising but they still have a foundation problem with poor customer service in many restaurants. Just like a small crack in a damn, if it doesn't get fixed it could lead to much bigger problems. There are a significant number of complaints being reported on blogging or corporate complaint web sites. In any industry that deals with the public you will always have some level of poor customer service but there are some things you just don't do when trying to resolve a customer complaint. For example, cursing or threatening a customer should never be done in any situation yet there are several cases of that happening. To threaten a customer with a weapon should not only be grounds for termination but also be an indication customer service training is needed.
12-28-2007 @ 12:19PM
ladyw said...
I agree that you shouldn't threaten them with a weapon, but I have been in a McDonalds and watched customers get very rude with the employees no matter how nice they were to them. It is not always the employee fault.
12-28-2007 @ 1:40PM
bozzy said...
Trying to figure out, was told that McD had a stake in Chipotle..is that true ? and does that count for the rise in value of McD ?