For a person that is watching what they eat, my colleagues have this problem where they do not know where to go for meals that I can eat as well. It frustrates and embarrassed me as well that they are so nice and have to bring themselves to me level when it comes to food.
So its really great when I explored this fast-casual segment in the US that sits between the Fast Food segment like Macdonalds and Wendys and the Casual Restaurant segment.
They try to keep the price point within USD 10 and a lot of the selling points are that they use fresh ingredients, non-antibiotic chickens, focus on customization.
Noodles and Co got listed this year not too long ago. Share price exploded from 18 bucks to 44 bucks. Now its down to 42 bucks.
It goes into a direct competing space of Chipotle and Panera Bread.
The thing about these companies are that they are very well run operationally.
They focus on creating a sustainable business. Now in Singapore, I doubt many would want to make fast food or restaurant management as a career, but these firms like Chipotle, Panera and Starbucks focus much on promoting from within.
Like my friend Hui Leong and Ser Jing from Fool.sg said, you can’t grow from 300 joints to 3000 joints, maintaining that quality without a plan.
Promoting from within, getting people that understands and have the passion for it is important to grow.
The similarities for these few companies is that the management culture becomes their advantage. I wouldn’t call it an economic moat, as I still think its rather narrow, but when you can grow so fast and still maintain quality as well as margins, it is a very good advantage.
Back to food. The thing about Noodles and Co out of all these restaurant that wants to do good at the same time is that they list out in their menu the ingredients, but also value add in that which of their noodle dishes have which kind of allegens.
It is a big issue when it comes to noodles because we know by default, wheat noodles contains gluten. So its great to see them have a break down that these are gluten free.
Shoots, for a person who wants to steer clear of gluten, it is a tall order. However, I get to appreciate it as I get older. Guess I am the target customer for places like this.
Would Noodles and Co come to Singapore? I doubt it. Even if they come I think most likely it will be out of my price range.
Still an interesting exercise as I was looking into Panera Breads, whose earnings was a slight disappointment causing a fall of 10% in share price.
Most of these stocks are high growth. Their PE ranges close above 20%. Panera is near 26% and Starbucks is even higher.
While PE may not be the best valuation tool, it does indicate which of these companies have above average growth rates baked into their share price.
When that growth rate disappoints like Panera, look out below.
Still, the nifty thing about these companies is that they can take a concept, say your signature Roasted Chicken recipe and scale it up to 1000 restaurants.
Your share price will grow with it.
For me, I try not to take carbo, I only eat very little millet where possible so this is probably out. But if this is in Singapore, might give it a try!
Subscribe to Investment Moats to Level Up Your Wealth Management Today
Join our mailing list to receive the latest news and updates from Kyith.