YUM Brands is meeting its maker in after hours trade this evening, down 15 points or 18%. I don’t know the history of YUM’s share price volatility, but this has to be one of the largest single day drops in the companies inglorious history.
When I was growing up in the 80’s a visit to KFC, Burger King or McDonald’s was a treat. It didn’t carry the negative connotation that so many people harbor today, when considering these brands. Back then, fast food was fun, tasty, and a break from Mom’s meatloaf. As these corporations grew in size, their methods changed and their quality control suffered. All of the legacy brands, including Dunkin’ Donuts, Wendy’s, McDonald’s and Burger King, are shit. Their food is sugar and salt laden death traps.
I fully admit being a customer of all three of these brands up until about a decade ago. Around that time I started to become aware of the things I put into my body and was horrified to learn about how unhealthy MCD’s super-duper BIG GULP soda bombs were. I cast them all away and started to frequent PNRA, CMG and WFM instead.
Today, even the organic market has changed. WFM has become the monstrous, oppressive organization that was once their polar opposite. I speak to all of the employees at the Princeton location and they all complain about how corporate management is, “filled with dicks.” The hipster employees are leaving their ranks in exchange for former Keyfood employees who work angrily.
A few years ago I had an insightful conversation with a big shot hedge fund manager, regarding his CMG short. He cited YUM’s “Cantina” line of tacos and how they’d eat into CMG margins. WRONG. I laughed at this assertion and quizzed him if he’s ever even eaten the shit that YUM shovels onto their plastic trays. He hadn’t.
Jim Chano’s can short China without ever visiting it. Numbers don’t lie.
But if you’re gonna sell short a food chain, I think you should see what you’re betting against–first hand.
Having said that, when it comes to the legacy brands, MCD is the biggest mark. Companies like SHAK will wear them down and annihilate them, in time. A new era of fast food is here and it’s gonna last for at least 20 years. SBUX has done a great job at adjusting to the environment, unlike DNKN.
My #1 takeaway from YUM’s numbers is even the Chinese are smarting up to the poison they sell. This has nothing to do with Chinese deceleration. YUM Brands just sucks.