Investment opportunities in Europe: company meetings, global brands and trade wars
Ryan Lightfoot-Brown sits down with Graham Clapp, manager of Elite Radar RWC Continental European...
From Burger King’s new meat-free Whopper, to McDonanld’s disgraced CEO, and KFC opening its first ever drive-thru-only restaurant in Australia (with no fewer than five driving lanes), fast food has been in the news a lot of late.
First popularised in the US in the 1950s, it is still popular today and includes anything from burgers to chicken nuggets, tacos to pizza and, of course, our own beloved ‘fish n chips’.
As 16 November is National Fast Food day we thought we’d take a quick look at the investment opportunities in this industry.
McDonalds is one of three underlying assets in Thorne Retail Park – a top ten holding in TIME:Commercial Long Income fund*. This fund invests in property and rents it out with long leases. In the case of Thorne Retail Park, Aldi, B&M and McDonalds each have leases in excess of 15 years.
Manager Roger Skeldon told us recently: “Thorne Retail Park is not far off the motorway, has good visibility and its mix of tenants works well with the catchment area and demographics. The businesses are also very resilient, so if the UK does see the economy slow further or enter recession, they are likely to hold up well.”
Burger King is owned by Restaurant Brands International and KFC is owned by Chinese company Yum!. Neither feature in the top ten holdings of Elite Rated funds*.
Greggs is a holding in City of London Investment Trust**. Headquartered in North Tyneside, it’s the largest bakery chain in the UK and now supplies many a quick lunchtime meal for workers in its vicinity.
And for those who want to eat more healthily, but who are still looking for convenience and help with preparation, there are of course companies like HelloFresh, that deliver fresh ingredients and step-by-step recipe cards to your door.
A holding in RWC Continental European Equity*, manager Graham Clapp told us: “HelloFresh has great potential and is one of the few internet-based companies that is already profitable. It’s the market leader in the UK and the US and is looking to expand the business, not just in terms of geography, but also with its client base.
“The company started with meal kits costing about $10 per person, which isn’t cheap, so only a certain part of the population could afford them. However, it noticed that Mondays were the most popular day for deliveries, making Friday to Sunday busy days in its facilities. It is now using the quiet days and its scale to produce cheaper meals (around $6-$7) and in doing so is making its products more attractive to more people.”
And of course, when it comes to fast food, it’s not just about the meals. As we all look ahead to darker, colder evenings curled up on the sofa, delivery is becoming a big business, with more and more Deliveroo bikes and Dominos Pizza mopeds racing between houses.
BMO Global Smaller Companies investment trust has a holding in Amsterdam-based Takeaway.com*. The company is currently bidding for Just Eat, the London-based online food order and delivery service.
Manager Peter Ewins told us: “Takeaway.com is in our European portfolio of shares. It has a strong position in Germany and the Netherlands but we have reduced our holding a little in recent weeks as we are unsure about the Just Eat deal and are in ‘wait and see’ mode.
Takeaway.com management hopes that by merging with Just Eat it will help the company better compete with the likes of Deliveroo and Uber Eats. However, shareholders are wary of a costly battle for the business as there has been a rival bid from Naspers, a South African company.
*Holdings as at 31 October 2019
**Holdings as at 30 September 2019