Even though the burger chain market is expected to grow in the near term, thanks to increasing consumer discretionary spending and the reopening of restaurants, not all burger chain companies will benefit. McDonald's (MCD) is expected to gain in the near-term based on its strong financials. But we think it is wise to avoid Shake Shack (SHAK) and Jack in the Box (JACK), given the weakness in their financials and unfavorable analyst sentiment. Let's discuss.Though burger chain companies are currently struggling to operate at full capacity amid a labor shortage, the rapid rate of vaccinations and rising consumer discretionary spending make the industry’s prospects bright.
Rising food prices due to supply chain disruptions could also raise pricing concerns. Federal Reserve chair Jerome Powell said that global supply chain issues could remain through 2022. However, the increasing number of people visiting restaurants and pent-up demand should help burger chain companies generate rising revenues ahead of the holiday season.
So, we think it could be wise to scoop up the shares of burger chain stock McDonald's Corporation (NYSE:MCD) because of its solid financials. However, Shake Shack Inc . (NYSE:SHAK) and Jack in the Box Inc. (JACK) do not appear to be well-positioned to capitalize on the industry’s growth. Because their near-term prospects look bleak, it could be wise to avoid these stocks.