Restaurants have had to bear the brunt of the pandemic. Along with retail establishments, restaurants have been among the worst affected by lower footfalls, lockdown guidelines, and a general fear of people willing to step out of their homes. At the same time, ordering food online or using drive-through facilities has been somewhat of a soothing point for food establishments. Of course, not every restaurant has been able to rely on such sales channels, as not everyone has their digital business setup. However, companies that have survived the pandemic and have successfully navigated the year 2020 are the ones that had their digital strategies in place.
The concept of sit-down meals may have changed, at least, for the near term. Therefore, if you are an investor looking for restaurants stock to buy now, you will want to focus on the larger and more financially stronger names. Companies that have the balance sheet strength to survive this difficult time and companies that can adapt to the changing situation by leveraging digital platforms are the ones to look at.
McDonald’s Financial Performance
McDonald’s is among the most recognized fast-food brands in the world. However, its revenue growth has not been that great. The total revenue has come down from around $27 billion to around $19-20 billion over ten years from 2011 to 2020. Net income per share has risen somewhat from $5.27 per share in 2011 to $7.9 per share in 2019 before falling to $6.31 per share in 2020. However, the gross margins have shows improvement, going up from 40% in 2011 to over 50% in 2020. As a result, McDonald’s continues to remain on many investors’ list of restaurants stocks 2021.
McDonald’s has grown its dividend payments quite significantly. They were $2.5 in 2011, and that number doubled to $5 per share in 2020. The payout ratio had gone up from around 48% in 2011 to 76% in 2020.