If you're drawn to fast food chain stocks as candidates for your portfolio, I don't blame you. Many have been fine long-term performers. McDonald's
Pricing is one way fast-food franchises can fuel their growth. Wendy's -- now Wendy's/Arby's
Product innovation can be equally powerful, especially if chains roll out products that become new favorites. Dairy Queen, owned by Warren Buffett's Berkshire Hathaway
It's a new day
Many restaurant chains are getting up early in their quest for more revenue, adding breakfast items to their menus. The market-research firm NPD Group notes that breakfast is responsible for nearly 60% of the restaurant industry's traffic growth over the past five years.
McDonald's has continued to bolster classics such as the Egg McMuffin with new arrivals like 2007's McSkillet Burrito. Between 2002 and 2007, the company upped its breakfast sales by 42%. Even Starbucks
Chains that aren't a natural fit for breakfast can still find success with desserts. Domino's Pizza has long offered pizza-dough-based CinnaStix, but it's now offering a traditional restaurant-style dessert with its Chocolate Lava Crunch Cakes. Tasty after-dinner treats might seem like a minor market, but it turns out that 85% of Americans eat desserts at least once a month, while 57% eat desserts on at least a weekly basis.
Another kind of innovation involves simply tweaking what you already offer -- something that Yum! Brands'
From the heartburn-inducing to the merely heartwarming, Panera Bread
Finally, taking advantage of social media is an excellent way to build business in the Internet age. Dairy Queen boasts more than 2 million members of its Blizzard Fan Club on its website. Through that connection, frozen treat enthusiasts learn about promotions and feel in touch with the company. Similarly, Starbucks has close to 1 million followers on Twitter.
Smart ideas like these help even the biggest fast-food chains continue to generate growth. And if your favorite restaurant stock hasn't yet pursued all these possibilities, don't despair -- that simply means they've still got room for future gains.
When seeking companies for your portfolio, look for businesses that innovate at every turn. A steady flow of new ideas can turbocharge a healthy company's sales, or bring a struggling firm back to prosperity.
What company has impressed you with how it has boosted sales? Let us know -- leave a comment below!
Longtime Fool contributor Selena Maranjian owns shares of Yum! Brands, McDonald's, Berkshire Hathaway, and Starbucks. Berkshire Hathaway and Starbucks are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a bull call spread position on Yum! Brands. The Fool owns shares of Berkshire Hathaway, which is also a Motley Fool Inside Value selection. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.
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