Getting Rid of the Noise

There was once a year when I ate McDonald’s ($MCD) for breakfast every workday.

It got to the point where the cashier(s) would see me walk in and process my order before I arrived at the counter.

It was probably my unhealthiest year, which correlated with poor gym attendance.

I bought the stock last Spring after having positive experiences with most European franchise locations.

Around that same time, Starbucks ($SBUX) became the second-biggest restaurant in the world, surpassing Subway. McDonald’s was and is still the biggest.

A fun business fact in the 2010s was that Subway had more locations than McDonald’s before the former’s global footprint declined.

While exercising at the gym this week, I heard on a podcast that the new Starbucks CEO, Brian Niccol, was awarded a $96 million pay package after 4 months.

Niccol was the CEO of Chipotle Mexican Grill ($CMG) from 2018 to 2024, during which time, according to Wikipedia, “the stock price of Chipotle has increased by almost eight times.”

One of my worst stock sales was exiting Chipotle in 2017, coincidentally on my birthday: January 10th.

Sure, the stock was down severely and continued to fall throughout 2017.

But I was still eating and enjoying my meals there when my natural metabolism was much better.

Then, I missed out on the Chipotle rebound. Badly.

I still own Starbucks and McDonald’s, but last year, since I’m now somewhat more of an adult, I focused on Sweetgreen ($SG) and CAVA ($CAVA) and bought both stocks.

From Investor’s Business Daily today on CAVA:

On Jan. 10, Argus Research named Cava stock, Amazon.com, and Chipotle Mexican Group as its top stock picks for 2025 among consumer discretionary stocks. The firm’s analysts highlighted the pace of new store openings and higher-priced menu items, according to TheFly.com.

Cava remains a restaurant industry outlier, ringing in double-digit growth. The Washington, D.C.-based company reported 352 stores at the end of September 2024, a 21% increase year over year. In the third quarter, same restaurant sales grew 18.1%, including guest traffic growth of 12.9%.

The fast-casual Mediterranean restaurant chain specializes in build-your-own falafel bowls and pita sandwiches, made with healthy ingredients and bold flavors. Cava stock packs a fiery punch, too, having soared 178% from a cup-with-handle breakout last February.

Also, today, for whatever reason, Starbucks is one of the best performers in the market, climbing over 8%.

Here’s Brian Niccol talking to Yahoo! Finance and Barron’s afternoon take:

“To us, Niccol is taking the reins to rebuild a company that had lost focus and direction,” wrote J.P. Morgan analyst John Ivankoe in a Wednesday note.

“As we’ve seen changes steadily drip out and gotten a clear sense from CEO Brian Niccol of the future vision, we do think the difference can be material,” wrote Morgan Stanley analyst Brian Harbour on Wednesday.

…

Thanks to the firm’s shift to more broad-based marketing, store traffic from casual customers — those who aren’t Starbucks’ Rewards program members — increased, wrote William Blair analyst Sharon Zackfia on Wednesday.

With last year’s weak sales, the company is expected to return to positive growth in the U.S. soon. Zackfia believes the underpinnings of Starbucks’ transformation plan are “on point,” but noted the stock’s current valuation seems fairly rich already.

“We see limited upside from current levels over the next year given embedded optimism already in the shares, and we reiterate our Market Perform rating,” wrote the analyst.

Morgan Stanley’s Harbour agrees: “As the stock had rallied into the quarter, maybe this news isn’t much of a mover for now,” he wrote. “We’ll have to watch the comp trajectory from here.”

I’m happy to own Sweetgreen, CAVA, Starbucks… and even McDonald’s.

But I should probably buy some Chiptole.

Watch “The Founder” (2016):

Ray Kroc: Now, I know what you’re thinkin’. How the heck does a 52-year-old, over-the-hill milkshake-machine salesman… build a fast-food empire with 16,000 restaurants, in 50 states, in 5 foreign countries… with an annual revenue of in the neighborhood of $700,000,000… One word… PERSISTENCE.

Nothing in this world can take the place of good old persistence. Talent won’t. Nothing’s more common than unsuccessful men with talent. Genius won’t. Unrecognized genius is practically a cliche. Education won’t. Why the world is full of educated fools. Persistence and determination alone are all powerful.