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Mickey-D's was among those stocks which disappointed investors this earnings week. During the second quarter, McDonald's Corporation's (MCD - Analyst Report) net income increased 3.7% to $1.4 billion. Worldwide sales at the company’s restaurants operating for at least a year increased 1%, in keeping with analysts’ expectations.

However, earnings per share came in at $1.38, lower than the Zacks Consensus Estimate by 1.4%. Additionally, same-restaurant sales in the U.S. for the second quarter increased 1%, lower than the average analysts’ estimate of a gain of 1.5%. The company also said same-store restaurant sales worldwide would remain unchanged for the month of July.

Reasons for the Decline

McDonald’s has already suffered from slowing global sales. Same-restaurant sales in Europe declined 0.1% during the quarter. Disappointing numbers from Europe, particularly France, and a lower guest count were the primary reasons. This, in turn, was probably a result of austerity measures.

Same-restaurant sales for the Asia/Pacific, Middle East and Africa (AMPEA) region also slipped 0.3%. For the U.S., sales did increase by 1%, but this was lower than the year-ago figure of 3.7%.

Big Mac’s Response

The increase in domestic sales was a result of several initiatives. The iconic brand’s consumers now have a variety of options to choose from on a menu which has undergone several changes. Additionally, widely publicized lower priced meals and late night breakfasts have also led to a rise in footfalls.

But the company may be facing an even stiffer battle ahead. Smaller competitors with widely differentiated offerings as well as limited time deals are continuing to beat this iconic brand at its own game.

4 Other Choices

Burger King

First up we have one of McDonald’s direct competitors Burger King Worldwide, Inc. (BKW - Analyst Report). Currently, the company is in the process of converting its business model into once in which is completely franchisee based. It’s innovative ‘BKDelivers’ program will also boost business. This initiative is designed to deliver directly to homes, schools and offices. It will definitely improve the company’s presence and increase same-store sales going forward.

Burger King holds a Zacks Rank #1 (Strong Buy) and has expected earnings growth of 15.70%. The forward price-to-earnings Ratios (P/E) for the current financial year (F1) is 23.57.

Jack in the Box

Next up we have Jack in the Box Inc. (JACK - Snapshot Report). This may seem to be a slightly risky choice at first glance because of the continuous decline in traffic due to macro concerns. However, the company has undertaken a rigorous operational and financial review of its Qdoba Mexican restaurants. It has decided to close 67 underperforming Qdoba restaurants by the end of fiscal 2013.

However, such a measure is expected to improve cash flow. Besides, the company is also opening 70 to 75 new restaurants and it seems such measures will result in a turnaround. Currently JACK holds a Zacks Rank #1 (Strong Buy) and has expected earnings growth of 17.12%. It has a P/E (F1) of 23.84.

Cracker Barrel

Our third choice is Cracker Barrel Old Country Store, Inc. (CBRL - Snapshot Report). It has also delivered returns in excess of 60% over the last year and has been paying out handsome dividends. The company has also raised the lower bound of its comparable sales growth guidance from 2% to 2.5% for fiscal 2013.

CBRL delivered strong third quarter earnings for 2013 in June. Revenues grew 5.2%, primarily due to higher traffic and growth in comparable same store sales.

Besides a Zacks Rank #1 (Strong Buy), the company has expected earnings growth of 10.83%. It has a P/E (F1) of 19.78.

Krispy Kreme Doughnuts

With a dedicated fan base for its iconic product, the Original Glazed donut, Krispy Kreme Doughnuts, Inc. (KKD - Snapshot Report) is our fourth choice. The company was one of the great turnaround stories in recent times. Widely expected to post double-digit earnings in 2014, the company recently revealed that it has refinanced its secured credit facilities.

KKD also said it had retired all of the outstanding balance of its term loan. It has also started a new share repurchase program. At $50 million, this is much higher than the $20 million program which ended in 2012. The company also has a Zacks Rank #1 (Strong Buy), with expected earnings growth of 29.30% and a P/E (F1) of 31.60.

On the whole, food and beverage stocks seem to be good bets at this point. You could do worse than adding these four to your portfolio.

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