In the past I've owned Metro, MTY Food Group, The Keg, Pizza Pizza, A&W Royalties, Restaurant Brands and Empire.
I find the whole sector so dependent on so many outside factors that they have no control over their own businesses.
Grocery stores have a very hard time keeping up with food deflation. Their costs go up but to stay competitive they have to constantly meet consumer demand for sales. It's just crazy how cheap some food items really are.
This makes these companies tough investments. I don't see any growth in the grocery store business so I don't put any money to work there anymore.
Fast Food or Quick Service
This can be an area for growth but wholly dependent on a consumer with lots of free cash flow. What do you know as an investor about the fast food industry? Where does everyone go to eat? You might have your favourite but is it a good investment? You like the food but is it a good business?
I'm a food court guy when I'm out so if I was to re-enter this space it would be with MTY. This is a major player on mostly all the food kiosks you see at the mall. They provide such a variety of choices with 5,469 locations. That's massive.
The stock closed today at $48.48 still well off it's 52 week high of $56.60. That's almost a 20% discount for you. To me it's cheap and also pays a small 1.2% dividend. Also a low p/e of 11.
Burgers, Pizza and Doughnuts
Pizza Pizza pays a 7% dividend but the stock has also lost 30% in the last 12 months. You are not keeping up with the payments. Are people getting sick of pizza? I don't know but money here seems wasted. No growth and the dividend is too high which spells danger to me.
A&W has fared a little better but do you believe people are going to be eating more burgers in the future? Who knows but I think the trend is for more healthier options. Pays a 5% dividend, only down 5% this year.
Restaurant Brands (QSR) is the parent company of Tim Hortons, Burger King and Popeye's. IOW they are red meat, chicken and deep fried bread. Is this a trend? They also treat their franchisees like shit. Stock is expensive pays a 3% dividend and is down almost 8% YTD. I sold my shares around this price a year ago.
You can pick your poison as far as food stocks go, the grocery business or fast casual. I know I'm lumping them all together to keep it simple but I'm just giving you what I've owned and what I think going forward.
There are others I haven't mentioned but these are all stocks I've owned in the past. If I was to buy a grocery stock it would be Empire the home of Sobey's and for fast casual I would buy MTY. It is by far my favourite Canadian food stock and a great company to buy and hold for the long term in my opinion.
There are others I haven't mentioned but these are all stocks I've owned in the past. If I was to buy a grocery stock it would be Empire the home of Sobey's and for fast casual I would buy MTY. It is by far my favourite Canadian food stock and a great company to buy and hold for the long term in my opinion.
"I like to pick stocks that are price makers and NOT price takers"
- David Baskin
MTY is a price maker!
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