Stallone’s “Demolition Man” Was Prophetic for the Fast-Food Industry
Stallone’s “Demolition Man” Was Prophetic for the Fast-Food Industry
Those three seashells have been renting space in my head for thirty years, but the suggestion that Taco Bell would win the “Franchise Wars” seemed like pure lunacy back in 1993. I grew up in the 70’s. No one could possibly beat MacDonald’s in a head-to-head corporate war. Or so I thought. The boys with the Big Mac aren’t doing so well this year.
MacDonald’s (MCD) is down 16.48% YTD. Denny’s Corp (DENN) is down 15.85% YTD, and they were listed this month by Investopedia as a growth stock to invest in. Chipotle (CMG), which I’m throwing into the mix for kicks and giggles, is down 21.69% YTD. They’ve all experienced labor problems and shutdowns in the past two years. Now, they’re dealing with rising food costs.
Demolition Man, the iconic Stallone/Snipes/Bullock classic, takes place in a SiFi inspired version of the year 2032. We’re ten years away. Are the “Franchise Wars” of the film prophetic? Yum! Brands (YUM), the parent company of Taco Bell, is down 17.01% YTD, but they also own KFC and Pizza Hut. Are we looking at a future of tacos, fried chicken, and pepperoni pies?
The burgers get smaller, the prices go up, and even kids don’t want to work in fast food restaurants anymore. Meanwhile, Americans and others around the globe are rediscovering the benefits of home cooking. If any restaurant business survives what’s coming this year, it will be Yum, simply because they’re more diversified. Buy it now. Thank me in ten years.
Water the Soup and Scramble the Eggs
My father grew up in a poor Irish family during the Great Depression. When asked how they got through those those tough times, he’d reply, “We watered the soup and scrambled the eggs.” Others must have gotten the same advice. Campbell Soup Company (CPB) is finally on an uptrend after a rough start to the quarter. I put them on my watchlist this morning.
How do you invest in eggs? I ask myself questions like this all the time. Charts and graphs are good. Using simple intuition has uncovered some lucrative opportunities for me over the years. Eggs can be scrambled and mixed with milk or water to increase the portion size. With rising food costs, this is how some folks feed their children. Count your blessings.
Cal-Maine Foods (CALM) is an American fresh egg producer that was founded in 1969. They first went public in 1996 and have produced a 2400% return for their original investors. This year alone, they are up 17.63%. Of course, the price of eggs has tripled since 2020, but they’re still a cost-effective way to feed the family. Ask any mom if you don’t believe me.
War is Being Waged on Multiple Fronts
In December 2021, the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) reported that fast food prices increased by 8% since December 2020. That’s the largest increase in fast food prices in over twenty years, according to the New York Times. The Franchise Wars alluded to in Demolition Man might have seemed silly in 1993. That conflict is happening right now.
The Russian invasion of Ukraine has sent oil prices skyrocketing, increased transportation costs, and has made food shopping and eating out more expensive. As an investor, I always look for the financial beneficiary. Gas prices go up. Buy oil stock. Food prices go up. Buy soup, eggs, and wheat (WEAT). They are three staples for balanced nutrition, and a balanced portfolio.
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