This week’s earnings show two fast-food chains going in different directions.
Chipotle’s earnings were encouraging. McDonald’s? Not so much.
That’s the lesson we can take from the earnings reports the two companies released early this week showing two fast-food chains going in different directions.
McDonald’s MCD posted net earnings of $1.39 billion for the second quarter of 2014, down just a hair from $1.4 billion the same quarter in 2013. Chipotle CMG , meanwhile, saw its earnings skyrocket. Net income was $1.05 billion, up 28% from the year before. Year-to-date growth also favors Chipotle. While McDonald’s had a higher net income for the first six months of the year ($2.59 billion versus $1.95 billion), the burger chain was down 3% while the burrito haven was up 26.6%.
Part of the reason for the numbers is the growing preference of consumers for fast casual restaurants, such as Chipotle or Panera PNRA . This has cut into the business of both fast-food joints and casual dining restaurants such as Olive Garden, or Red Lobster.