You might not have heard the name before, but if you’ve frequented a fast-food outlet the last couple of years, there’s a high probability you’ve eaten at one of Inspire Brands’ many restaurant chains somewhere along the way.
As the owner of such popular eateries as Arby’s, Dunkin’ Donuts, and Buffalo Wild Wings, Inspire Brands is the driving force behind many of North America’s favorite restaurants.
Inspire Brand Subsidiaries
Inspire Brands is a holding company for many restaurant brands that the firm believes can “supercharge” each other’s respective growth potential. In addition to Arby’s, Dunkin’ Donuts, and Buffalo Wild Wings, Inspire Brands also operates Baskin-Robbins, Jimmy John’s, Rusty Taco, and Sonic Drive-In.
Founded in 2018 after the Arby’s Restaurant Group completed its acquisition of Buffalo Wild Wings, the company now runs 32,000 restaurants in over 65 countries, accounting for more than $27 billion in global system sales.
Is Inspire Brands Publicly Traded?
Inspire Brands is not currently a publicly traded company — so if you were searching for its ticker symbol on the NYSE, you’d be out of luck.
At the moment, Inspire Brands is still a privately run enterprise, as are all of its subsidiary businesses.
Who Is Inspire Brands Owned By?
The American private equity firm Roark Capital Group is the majority owner of Inspire Brands. On a day-to-day basis, Inspire is managed by Paul Brown, its co-founder and chief executive officer.
Will Inspire Brands Stock IPO?
While Inspire Brands is just the kind of well-run company that most stock market observers would be keen to invest in, there’s no suggestion at present that Inspire is seeking to go public.
Alternatives to Investing In Inspire Brands
While you can’t buy a stake in Inspire Brands just yet, that doesn’t mean you can’t get exposure to many other food and beverage businesses that are currently publicly listed.
The following six companies would make for good alternative investments while you wait for that longed-for Inspire Brands IPO:
The J. M. Smucker Company (SJM)
Founded in 1897, J. M. Smucker rose from humble beginnings selling apple butter and cider in Orrville, Ohio, to become one of North America’s biggest purveyors of jam, jelly, and other sweet and savory preserves.
The company expanded its interests to further include a pet food arm, acquiring Big Heart Pet Brands in 2015 and Ainsworth Pet Nutrition in 2018.
After a recent Q2 earnings and revenue beat, now might be the perfect time to buy SJM stock. The company’s share price lagged poorly over the last five years, trending more or less sideways over the period. This contrasted sharply with the S&P 500, which has doubled during the same time frame.
But with renewed optimism for the future, it’s not inconceivable that the firm is about to see a significant run-up sometime soon.
Although the company did exceed expectations in Q2 2021, it underperformed quite badly in some segments, most notably in its Pet Food business, where profits fell 20% year-on-year.
But Smucker’s overall net sales increase of 1% — at a time when the company faced costly supply chain disruptions — was enough to please shareholders and analysts, pushing the brand’s stock price up 3% in premarket trading.
However, income investors will be tempted by the fact that J. M. Smucker (SJM) is now on the cusp of becoming a “dividend aristocrat” in just a few quarters, having started its payout increase streak all the way back in 1997.
The company currently boasts a dividend yield of over 3% and, based on its next 12 month’s earnings figures, has an attractive and safe payout ratio of 43%. SJM’s three-year dividend growth rate of 16%, while not as impressive as the Consumer Staples sector average of 19%, should still be pretty tempting.
Restaurant Brands International Inc. (QSR)
Similar to Inspire Brands’ portfolio of fast food operations, Restaurant Brands can also boast ownership of some of the biggest quick-service restaurant companies in the world. The Canadian-American multinational holding company runs the Burger King, Popeyes, and Tim Hortons brands, generating around $34 billion in annual sales across 27,000 outlets in over 100 countries.
QSR is the fifth-largest fast food operator in the world and, naturally, has faced many significant headwinds due to the pandemic in the last couple of years. Staff shortages and mask mandates — as well as inflationary issues — have all contributed to a more difficult operating environment recently.
Yet, the company just posted one of its best revenue hauls of the previous five years. Strong international sales among its three main brands helped drive up its top line, despite a poor showing by Burger King and Popeyes in the U.S.
Restaurant Brands (QSR) expects to turn around Burger King’s fortunes in North America, having brought onboard Tom Curtis from Domino’s Pizza to carry out the task.
Overall, the business still has plenty of growth ahead, with even more potential for international expansion and a rebound in Tim Hortons’ sales growth. Third-quarter 2021 cash flows from operations of $1.26 billion demonstrate the company is on the right track, and an EPS of $0.70 — beating estimates of $0.69 — was also up 48.9% year-on-year, showing that the business has no issues on the profitability front either.
Kellogg Company (K)
Kellogg’s is one of those rock-solid companies that built its reputation on quality products, and it now enjoys the comfort of a whole host of impenetrable brand moats protecting its business. Furthermore, the firm is trading in “value territory” and has a dependable dividend to boot.
As one of the most well-known household names globally, the Kellogg Company (K) will be around for a long time to come, making it a great pick for conservative-minded investors who place stability over kinetic price action, sporting low volatility but little in the way of capital appreciation.
However, that shouldn’t be a problem at present, as the firm is actually trading at a discount — and might even be a candidate for growth-oriented investors looking for a quick scalp.
In fact, operating profit for the company grew 11% year-over-year in the third quarter, and its earnings-per-share was also up 18%.
Kellogg’s stock grew around 2% for the year, and with management believing that its superior pricing power will ensure it continues to generate returns easily above its cost of capital — even operating under a decidedly bearish and pessimistic set of assumptions — that price run-up could keep on going.
Even if the prospect of price accumulation doesn’t pan out, there’s still Kellogg’s excellent dividend to entice investors. The company now has 17 years of continued annual dividend rises — and despite having only grown in the low single digits recently, its reliability and 3.65% forward yield make it stand out from the crowd.
Source: Unsplash
McCormick & Company, Incorporated (MKC)
McCormick (MKC) is a long-established giant of the food staples industry, tracing its roots all the way back to 1889 when it began providing foods, ingredients, and flavors with a workforce of just three people.
Fast forward to today, and the company now employs more than 13,000 employees worldwide, with a business that generates over $5 billion worth of sales every year.
And that business is huge: not only does MKC market products under its own well-known brand, it also owns other equally recognizable names such as Cholula Hot Sauce, French’s mustard, and Schwartz spices, to name but a few.
McCormick breaks its operations down into two segments; the first is its consumer wing, where it sells directly or indirectly to consumers through shopping outlets or wholesale distributors. This segment accounts for about three-quarters of its operating income.
The firm’s second segment is its flavor solutions business, through which it sells customized products to other food manufacturers.
Although McCormick’s size and reach are already pretty formidable, the company continues to grow. Since 2016, MKC’s revenues have grown at a compounded annual growth rate of 6.8%, while over the same period, its dividend payout has increased 9.6% on a CAGR basis.
The company also expects its net sales to grow up to 13% for 2021. Another dividend aristocrat with 35 years of consecutive payout increases, its dividend looks fairly safe for the time being. Indeed, the firm announced an 8.8% dividend rise, taking its annual dividend from $1.36 to $1.48.
Danone S.A. (DANOY)
Share price-wise, the Paris-based food multinational Danone (DANOY) has not had a good year. From a local high of above $15 in August 2021, the company has seen its stock value plummet around 20% in the last few months, sitting more than 4% down for the calendar year at just below $12 today.
The brand is a specialist and world leader in the dairy and dairy-adjacent industries but has suffered recently — like many other businesses — from supply chain pressure and rising inflation.
That said, the company reported a 3.8% increase in net sales for the third quarter of 2021, reiterating its full-year guidance for a return to 2020 operating margins and profitable growth for the second half of the year.
However, DANOY’s price woes aren’t necessarily a bad thing for dividend investors, with the firm’s current trailing 12-month dividend yield an enormous 7.92% right now. The company has never had a problem generating cash flow in the past, and its payout ratio of 47.44% looks secure.
But if growth potential is more important than income investing, Danone still appears a promising prospect. Its price-to-sales ratio of 1.41 is slightly better than the sector as a whole, and with increasing profitability predicted, shareholders should expect to see a positive move in its market value soon.
Nestlé S.A. (NSRGY)
Nestlé (NSRGY) responded to the recent crisis in input cost inflation by passing the shortfall — arising from the ongoing global supply chain problems — onto its own paying customers.
While some observers might take a cynical view of this action, shareholders were probably pleased since it meant that Nestlé’s management was able to announce a rise in its full-year guidance. In the process, Nestlé maintains its 17.5% operating profit margin.
More importantly, perhaps, this strategy of implementing price hikes for consumers also means that the company can plan ahead — not just into the fourth quarter but well into 2022, thereby assuaging any long-term fears for the business’s future. And Nestlé isn’t the only company to defray rising raw material costs; most firms with a strong brand presence will almost certainly do the same too.
Investors will undoubtedly welcome the fact that the world’s largest food company is also taking this long-term approach to other aspects of its business.
Nestlé is known to favor sustainable growth through the practice of prudent decision-making and has proved that its conservative capital allocation at a time of significant market downturns can pay off.
Indeed, NSRGY’s current return on equity — a measure of its efficiency — is 27.22%, putting it in the top 8% of all other companies in the Consumer Packaged Goods industry.
Is Inspire Brand Stock Publicly Traded: The Bottom Line
Inspire Brands is a well-managed holding company that operates some of America’s most cherished fast food outlets. Unfortunately, it is also a privately run business, meaning that hopeful investors cannot yet publicly participate in its ongoing success.
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