Consultancy firm Interbrand annually bestows top honors to the best global brands. Here are this year's top restaurant brands:
Despite experiencing its first global sales decline in roughly a decade, McDonald's remains the top-ranking restaurant brand on the Interbrand list. Standing at No. 7 on the list overall, McDonald's increased its brand value 5% during the past year. The brand has increased its ranking by two spots since the list's 2001 inception. 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'll challenge McDonald's going forward.
Yum! Brands (NYSE:YUM)
Yum! Brands houses two of the four top restaurant brands -- KFC and Pizza Hut -- in its corporate stable. At No. 66 on the list overall, KFC increased its brand value 3% during the past year. Yet the fried chicken brand has plummeted 15 spots in the ranking since the list's inception. KFC derives about 40% of its revenues from China. Yet many Chinese consumers are wary about its food quality after KFC's chicken processing scandal earlier this year. The questionable practices will likely hurt the brand's value going forward. Yum! Brands' other top brand, Pizza Hut, appeared at No. 94 on this year's list, down from No. 72 in 2001, and increased its brand value 2% during the past year. Pizza Hut's focus on product innovation, heightened advertising, and growing international presence has helped propel the brand.
The coffee giant's ranking has actually decreased 19 spots since the list's 2001 inception. Yet currently sitting at No. 91 on the list overall, Starbucks increased its brand value 8% during the past year, the most of the above-mentioned brands. Starbucks 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 possesses 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."
Do top global restaurant brands satiate their stockholders?
The three companies behind these brands have returned incredible profits to their shareholders during the course of their publicay traded lives. Yet only Starbucks has edged out the S&P 500's 24% year-to-date return. In fact, McDonald's and Yum! Brands have returned only 9% and 2%, respectively, so far this year. By comparison, Starbucks has returned a wildly impressive 51% to its shareholders during that 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. Starbucks, McDonald's, and Yum! Brands returned 466%, 424%, and 377%, respectively, over the past decade, while the S&P 500 returned 108% during that same time.
The endurance and resilience of these restaurant giants coupled with their respective brand strengths has helped them earn loyal customers worldwide. These qualities also appear quite palatable for their long-term shareholders.
Fool contributor Nicole Seghetti has no position in any stocks mentioned. You can follow her on Twitter @NicoleSeghetti. The Motley Fool recommends McDonald's and Starbucks. The Motley Fool owns shares of McDonald's and 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.