I was doing some poking around looking into different companies that interested me when I came across something quite surprising. I noticed that Chipotle has a higher P/E ratio (56), than Google (32), Apple (15), HP (11), and IBM (12). That means people value Chipotle’s profits more than each of those technology companies. I did a little more digging and discovered that McDonalds has a higher market cap than Twitter and eBay combined, Panera is valued 4x as much as Zendesk, and Yum Brands (Taco Bell, KFC Pizza Hut) has as P/E ratio that is 2x higher than Oracle.
I would venture to guess that most food/consumer goods companies are listed at the less risky end of the investment spectrum when compared to technology companies. Does that really mean that food offers a greater upside and less downside risk than those high growth businesses everyone loves to talk about? I guess “changing the world” isn’t as important as eating out. Now obviously there are thousands of different ways to dissect each of these companies, but I do find it interesting that investors believe food has more potential than technology. After all, it seem's much more difficult to create a new Google than a new Panera.