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The 10 Fastest-Growing Fast Food Companies


Ahead of end-of-the-day earnings for some, a list of fast food makers currently cooking up healthy revenue.

Lynne Collier explained Chuy's unique position in the current market. "It's a kid-friendly, Elvis-themed, Tex-Mex restaurant, and it's one of the few true growth companies in the space, so after it went public it really took off. There's a lot of excitement about the unit growth potential. Their performance outside of Texas has been very, very strong."

Collier underscores Chuy's significance as casual-dining Mexican restaurant, explaining that no one has really been able to make Tex-Mex work on a national level before.

This includes previous attempts by restaurant runners like Brinker International (NYSE:EAT), which dropped its 160-unit On the Border franchise in 2010; DineEquity (NYSE:DIN)-owned Applebee's International, which sold its Rio Bravo Cantina chain to Chevys Restaurants at a loss in 1999; and Avado Brands, Inc, which dumped nearly half of its 91 Don Pablo's restaurants after bankruptcy in 2007.

"A ton of chains have tried to go on a national basis and its been pretty hard. One of the problems with Mexican is the consumer doesn't want to pay a lot of money for it, and it's hard to have that pricing flexibility on a menu that single restaurants have."

Chuy's has expanded from just 12 locations in 2007, and plans to open at least 50 to 55 from 2012 to 2016, according to Seeking Alpha. Chuy's small hold on the $6 billion Mexican casual dining market (roughly 6% market share) is set to blossom as company is currently targeting a long-term goal of 300 units.

In the same article, Chuy's is valued trading at 19x 2012 estimated EBITDA, versus an industry group, including Bravo Brio Restaurant Group (NASDAQ:BBRG), Chipotle Mexican Grill (NYSE:CMG), and others trading at 10.3x 2012 EBITDA. (Shares of Chipotle took a hit two weeks ago when investor David Einhorn said the stock was overvalued.)

But, as Collier points out, this rapid growth begs an important question: While Chuy's has done well so far in the short term, is it really going to be the one that makes Mexican fast-casual work on a national scale in the long run, when it hasn't before?

Buffalo Wild Wings

Buffalo Wild Wings' (NASDAQ:BWLD) stock took a steep freefall back in July, dropping from around $85 per share to a $68 intraday low on July 25 after a company forecast (despite beating Q2 expectations) exhibited fears over higher food costs in light of this summer's chicken wing shortage. Since then, shares have recovered, now pushing above the mid $80 range. Over the past year, company revenues have increased 29.7%, with a current market cap of $1.6 billion.
Analyst quoted for this article may have positions in some of the stocks mentioned.
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