Restaurant Stocks Struggle as a Result of Global Economic Slowdown

July 26, 2012

NEW YORK, NY--(Marketwire -07/26/12)- The current global economic slowdown has begun to take its toll on the Restaurants Industry. Chipotle Mexican Grill, McDonald's, and Yum! Brands all saw their shares fall after posting earnings that failed to impress investors. Chipotle shares dropped over 20 percent as the company posted its slowest sales growth since 2010. Five Star Equities examines the outlook for companies in the Restaurants Industry and provides equity research on Yum! Brands, Inc. (YUM) and The Wendy's Company (WEN).

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A sluggish global economy seems to have cooled down sales of companies in the Restaurant Industry. Recent data has shown that retail sales in the U.S. have fallen for three consecutive months, China's growth is as its slowest pace in years, and Europe's debt crisis continues to expand. Moody's Investor Services earlier this week slashed the credit ratings of Germany, the Netherlands and Luxembourg to "negative" from "stable."

"McDonald's global comparable sales remained solid for the quarter while overall results reflected the slowing global economy, persistent economic head winds and the investments we've made to enhance restaurant operations," CEO Don Thompson said in a statement.

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Yum! Brands are the world's largest restaurant company in terms of system restaurants, with more than 37,000 restaurants operating in 125 countries. The company's second quarter profit increase of 4.7 percent fell short of analysts' estimates, as costs increased in China. Shares of the company have fallen over 13 percent in the last three months.

The Wendy's Company is the world's third-largest quick-service hamburger company. The company is scheduled to release second-quarter 2012 financial results on Thursday, Aug. 9, 2012, before the market opens. For the second quarter ending July 1, 2012, the company expects to report a same-store sales increase of approximately 3.0 percent for Wendy's North America Company-operated restaurants.

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