McDonald’s Vs. Wendy’s: Which Restaurant Stock Is The Better Pick?

Hamburger, Burger, Barbeque, Bbq, Beef, Bun

Fast-food aficionados love to talk up their favorite establishments, and a lively debate can be enjoyed with the burger-and-fries crowd over the offerings from McDonald’s Corp. (MCD - Get Rating) and Wendy’s Co. (WEN - Get Rating). And these companies can also generate a lively discussion on their respective stock performances.

Companies like MCD and WEN initially found a new wave of consumer appreciation when the COVID-19 pandemic forced the shutdown of restaurants – both establishments had already been veterans in the drive-thru takeout environment that took on a new glow after indoor dining was paused for months.

Beyond that, the companies are very different entities. McDonald’s is the larger of the two, with approximately 39,100 eateries and a wide international footprint, compared to Wendy’s 6,800 locations and a mostly U.S.-focused market. Most of the locations of each fast-food company are franchised: Wendy’s only has about 6,400 locations franchised and McDonald’s has about 35,000.

Wendy’s franchise operations took a hit last July when NPC International, which owns nearly 400 Wendy’s restaurants – filed for Chapter 11 bankruptcy protection in July. Earlier this week, a bankruptcy judge approved NPC’s $801 million sale of roughly 1,200 Pizza Hut franchises and half of its Wendy’s stores to Flynn Restaurant Group, with Wendy’s the other half of its former franchise operations, which it plans to turn over to another group of franchisees.

Both MCD and WEN, along with other fast-food restaurant chains, were targeted in an effort last week to raise the minimum wage in their restaurants to $15 per hour. President Biden made the increase of the federal minimum wage to $15 one of his domestic policy priorities – neither MCD nor WEN have publicly commented on the Biden proposal.

Which of these restaurant stocks is the better pick for your portfolio?

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