BrandZ annually bestows top honors to the best global brands. Here are this year's top fast-food brands.
Despite experiencing its first global sales decline in roughly a decade, McDonald's remains the top-ranking fast food brand on the list. According to BrandZ, McDonald's boasts a nearly $85.7 billion brand. Yet, it lost 5% of its brand value, and slipped one spot on the overall list from last year. McDonald's has placed renewed emphasis on reimaging itself by offering healthier, premium items like its Egg White Delight McMuffin, Premium Chicken Wraps, and McCafe Smoothies. In the wake of the recent recession, the burger giant has beefed up promotion of its Dollar Menu and Extra Value Menu, hoping to lure more budget-conscious consumers. Yet, by attracting these customers, the company is sacrificing profit margins, an issue that will challenge McDonald's going forward.
Starbuck's ranks as the second most-valuable fast-food brand. Boasting a nearly $26 billion brand, Starbucks' brand value increased a wildly impressive 44% during the past year. The coffee giant may attribute its gain to the company's growing number of menu offerings and recent acquisitions, including Evolution Fresh juices, La Boulange baked goods, and Teavana teas. Transforming the way the world experiences coffee, Starbucks still harnesses a great deal of international growth potential. According to CEO Howard Schultz, with its Teavana acquisition, Starbucks "intends to do for tea what it's done for coffee."
Yum! Brands (NYSE:YUM)
Yum! Brands actually houses two of the top five fast-food brands -- KFC and Pizza Hut -- in its corporate stable. Boasting a nearly $12 billion brand, KFC's brand value increased 20% in the past year. The fried-chicken maker jumped eight spots from No. 91 in 2013 to No. 83 in the overall BrandZ ranking in the past year. KFC derives about 40% of its revenues from China. Yet, many Chinese consumers became wary about its food quality after KFC's chicken processing scandal last year. The questionable practices may hurt the brand's value going forward. Meanwhile, Yum's $7.5 billion Pizza Hut brand increased its brand value by 25% during the past year. Pizza Hut's focus on product innovation, heightened advertising, and growing international presence has helped propel the brand.
Do top fast-food brands satiate their stockholders?
The three companies behind these brands have returned incredible profits to their shareholders during the course of their publicly traded lives. But none of them edged out the S&P 500's 17% return during the past year. In fact, Starbucks, Yum! Brands, and McDonald's have returned 14%, 9%, and 4%, respectively, during the same period.
Yet, when we look at performance over a longer span of time, all three of these companies have significantly outperformed the overall stock market. McDonald's, Yum! Brands, and Starbucks returned 435%, 389%, and 296%, respectively, during the past decade, while the S&P 500 returned 114% during that same time.
The endurance and resilience of these fast-food giants, coupled with their respective brand strengths, has helped them earn loyal customers worldwide. It also appears very palatable for their long-term shareholders.
Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends McDonald's and Starbucks. The Motley Fool owns shares of Starbucks. 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.