Moving back to our focus this week on Restaurants, analyst Jeff Bernstein spoke to us a little bit about the crunch in casual dining restaurants. Unlike quick service restaurants, casual dining restaurants aren’t franchises, and handle all operating costs themselves. Mr. Bernstein details how those costs have changed in the last year:
TWST: You mentioned the cost side of the equation. How bad is it?
Mr. Bernstein: We’ve seen double-digit increases in a number of core commodities. The biggest increases have come from grain, wheat and cheese prices, which obviously impact a lot of our sandwich makers from the bread side and pizza players from the cheese side. Across the board, we’ve seen increases on center of the plate commodities such as beef and chicken. It doesn’t seem to be abating as quickly as we would like, so the companies are forced to be more aggressive in terms of menu pricing to help to offset some of those cost pressures.
For the full interview with Mr. Bernstein, including a complete overview of the current market climate in the restaurant sector, and stock picks, click here.
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