3 Tasty Restaurants Delivering Mouthwatering Growth

Chipotle Mexican Grill, Buffalo Wild Wings, and Domino's Pizza are well positioned to continue delivering mouthwatering growth for investors for years to come.

Jan 10, 2014 at 5:05PM

The restaurant industry can be notoriously challenging and competitive, but it can also be a very lucrative business for well-run companies delivering the right menu and experience to their customers. Chipotle Mexican Grill (NYSE:CMG), Buffalo Wild Wings (NASDAQ:BWLD), and Domino's Pizza (NYSE:DPZ) are positioned for growth for years to come.

Chipotle is spicy
Chipotle Mexican Grill is one of the most explosive growth stories in the restaurant business over the last few years. The fast-casual category is a booming niche, and Chipotle is a growth leader in that segment.

The company's "Food With Integrity" approach to Mexican cuisine is based on a simple menu and a strong focus on high-quality natural ingredients. Chipotle is a remarkably efficient operator; the company has one the highest throughputs in the business, which means it's able to move its customers quickly through its lines to sustain rapid growth and provide a high-quality service.

Sales increased by 18% to $826.9 million on the back of 37 new restaurants and a big jump of 6.2% in comparable-restaurant sales during the third quarter of 2013. Even as Chipotle continues expanding its store base, comparable-sales performance shows that demand remains healthy and there is no sign of saturation or cannibalization at this stage.

The company has 1,539 restaurants as of the end of the last quarter, and it plans to open between 180 and 195 new restaurants during 2014. International growth, product innovation, and expansion into new areas like Asian food and pizza with its ShopHouse and Pizzeria Locale concepts are early stage opportunities providing a lot of room for growth in the coming years.

Buffalo Wild Wings is simple and effective
Buffalo Wild Wings offers a simple and effective proposition to its customers: tasty food, plenty of beer options, and widely available TVs to watch sports. Simplicity is working quite well for the company judging by financial results: Buffalo Wild Wings has increased sales at 25.8% per year through the last five years, and earnings per share have grown at 22.7% annually over that period.

For the third quarter of 2013, the company delivered a strong increase of 27.9% in revenues while earnings per share jumped by a whopping 65.4% year over year. Same-store sales increased 4.8% at company-owned restaurants and 3.9% at franchised restaurants during the quarter.

The company is implementing a new "wing by the portion" program to keep costs under control and ensure that customers receive a more consistent amount of chicken in their order rather than a fixed number of wings. Like Chipotle, Buffalo Wild Wings is also venturing into pizza, with PizzaRev.

The company had 534 franchised restaurants and 415 company-owned stores for a total of 945 stores as of the end of the third quarter. In 2014, the company plans to open 45 company-owned and 40 franchised locations in the United States and Canada, and it expects international franchisees to open at least 10 restaurants across the globe during the year.

Delivering global growth and pepperoni pizza
With 10,566 stores in more than 70 countries, Domino's Pizza is a recognized world leader in pizza delivery. The company delivers more than 1 million pizzas per day on a global basis, and it makes more than half of its sales from outside the U.S.

Global exposure has been a big plus for investors in Domino's over the years: International same-store sales have increased at an average 5.6% annually with no negative years from 1994 to 2012. Sales have also improved materially in the U.S. since 2010, when the company came out of the recession with a renewed menu.

Performance remains strong as of the last quarter with a year-over-year increase of 18.6% in earnings per share during the third quarter of 2013. Domestic same-store sales increased by 5.4%, while same-store sales at international locations grew by 5% during the quarter, marking the 79th consecutive quarter of international same-store sales growth for the company.

Management believes it has room to open at least 2,500 new stores in the company's top 10 markets, and that doesn't even include the opportunities in other countries where Domino's is still in its initial growth stage.

Bottom line
When investing in such a competitive industry as restaurants, choosing the right companies is of utmost importance. Chipotle, Buffalo Wild Wings, and Domino's Pizza know what their customers want, and they are capitalizing on their opportunities while generating delicious returns for shareholders. Investors looking for well-managed companies with superior growth prospects may want to consider picking any of these options from the menu.

Let your portfolio feast on these six growth stocks
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he’s ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he’s making this premium report free for you today. Click here now for access.

Fool contributor Andrés Cardenal has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Buffalo Wild Wings and Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information