Analysts are boosting their ratings and targets for fast food companies, in large part, due to their drive-thrus and cheap menu options, which are likely to encourage frequent visits.
Piper Sandler’s Nicole Miller Regan boosted her rating on Dunkin’ Brands Group to Overweight from Neutral and raised her price target to $89 from $66. She wrote that the company’s low-price products, which consumers are likely to return to frequently, provide a winning recipe for the stock. “Said different, affordable luxuries, served with high-levels of convenience, and supported by digital tools…are positioned to benefit,” she wrote.
Additionally, J.P. Morgan analyst John Ivankoe reiterated a Neutral rating on Starbucks but lifted his price target on the stock to $80 from $75. The company’s drive-thru locations have return to posting positive comparable sales, and his new price target is 25 times his 2022 earnings per share estimate.
By contrast, Wedbush analyst Nick Setyan downgraded Darden Restaurants to Neutral from Outperform. However, he rose his price target to $95 from $88.
Setyan is modeling for the company to return to pre-COVID levels by fiscal 2022 but wrote that both the “margin opportunities and share gain potential [are] well understood” already.
Meanwhile, Dunkin’ is taking convenience to the next level with a new payment system.
The chain is testing a contactless payment system allowing customers to be scanned and charged as they exit the store, reported The Wall Street Journal (Sept. 23). Put in place in one experimental location in California called Dunkin’ Dash, the system uses Mastercard Inc.’s Shop Anywhere software.
Customers register their credit cards before entering the store and cameras inside will track them as they select individually packaged baked goods, self-pour coffee, and snacks.
Consumers will have to sign up separately with each business using Mastercard’s technology, according to Stephane Wyper, Mastercard SVP of innovation, who noted that the registration process is designed to take less than 30 seconds.
The system will likely be attractive to consumers as a new survey from Sense Photonics and The Harris Poll found that 70% of Americans would prefer a completely human-free contactless shopping experience.
The survey found that 72% of Americans are more likely to shop at retailers that offer contactless, curbside order pickup, with 35% even indicating they would be fine never making retail purchases in a store again.
Delaware North Cos., which runs food and beverage stands in venues like MetLife Stadium in New Jersey, plans to test Shop Anywhere in the fourth quarter, according to Jeffrey Wilkinson, the company’s chief information officer.
Delaware North is working with sports leagues like the NFL to test the technology in venues that will host games and fans this year. “Guests and fans coming into a stadium environment now want to quickly and safely get in and out with little to no wait times on entry and exit,” said Wilkinson.