"The Restaurant Performance Index Is Flashing Warning Signals:
.. The National Restaurant Association, the other NRA, is the leading business association for the restaurant industry. This encompasses about 970,000 restaurant and food service outlets and a workforce of nearly 13 million employees. Many consider this organization as the definitive source when monitoring the pulse of the industry.
.. 38% now project conditions to worsen. That's more than double the previous month's 18%. The NRA indicated that this level of pessimism is the highest in nearly four years, dating back to 2008's recession.
Restaurant industry spokesmen noted that formerly reliable growers like McDonald's (MCD) and Chipotle (CMG) spent the summer indicating economic weakness was hurting sales. Yum Brands (YUM) lowered expectations last week. That was simply the latest example of the industry-wide weakness."
Going over the Fiscal Cliff is bad for all restaurants. Here's why. No firm is aggressivly expanding until they know the tax implications. And as such slower growth is bad for comps.
Also, on the demand side, segments like industrials will get a bump post, as the inventory is depleated in the near term. But restaurants do not have such a relatively large pent up demand effect.
We are short CMG given the margin is highly dependant on low inflation on input costs, and little to no advertising. Once the fiscal cliff is behind us, we see the US inflation heating up in an attempt to goose growth... and CMG has already stepped on the ad treadmill. Once ad spend starts to be used to goose demand, the margins get smaller. Part of the natural life cycle of restaurants.
Well, it is pretty clear to me that mgt is in buying their shares everytime this hits 260. I think their earnings wil be teerrible and this is why mgt is rying to lessen the # of shares outstanding. So, unless the mkt tanks because of DC or something else I think you have to wait for the bad earnings for this to tank. However, with as bad as EVERY RESTAURAUNT who has reported forecasts look, they may not be able to stop a move down to 240 even buying shares....still think this is a 150 to 175 stock......
"Food commodity prices to increase for several years"
".. In October, the stock price for shares of Yum! Brands Inc. (NYSE YUM) dipped after McDonald's Corp. (NYSE: MCD) and Chipotle Mexican Grill (NYSE: CMG) each missed analysts' expectations in the third quarter blaming higher commodity and labor costs.
And the National Council of Chain Restaurants said in a recent study that using corn for a fuel source in America could add up to a $3.2 billion cost for the food service industry."