fool.com – Fast food stocks delivered a wide range of returns for investors this year as companies battled for customer traffic in this highly competitive industry. A few well-known chains, including Chipotle(NYSE:CMG), underperformed by a wide margin. Others, like Panera, left the public markets altogether in favor of going private.
The stocks that trounced the S&P 500 did so by posting a mix of healthy sales and profitability gains. Let’s take a closer look at the three best performers in the sector.
3. Yum Brands
Yum Brands (NYSE:YUM) outpaced the broader market by 10 percentage points this year as it showed off the power of a diversified approach to fast food. Sure, the Pizza Hut chain struggled with sales declines and a modest drop in profitability in 2017. However, those dips were more than offset by gains in Yum Brands’ other chains.
Taco Bell’s comparable-store sales growth sped up to a 5% pace through the first three quarters of the year from 1% in the prior year period. KFC, its biggest and most profitable division, also accelerated its growth pace even as restaurant-level margin rose to 15.1% of sales from 14.4%.
Yum Brands combined these successes at existing locations with aggressive store growth, especially in international markets. Altogether, these initiatives pushed operating profit higher by double digits in the most recent quarter. CEO Greg Creed took that opportunity to affirm executives’ full-year guidance that calls for high single-digit profit growth in 2017, or just a minor slowdown from the prior year’s 11% increase.