Notable news items from the last few days and Friday’s price action.
- MCD can serve customers faster because of new methods of preparing food. A machine that dispenses frozen fries into a wire-mesh basket for a deep fry in hot oil has reduced the time taken to about four seconds. Previously, a basket of fries was loaded manually and took two-to-three minutes. MCD announced Friday that the wages of its 6,000 rank-and-file workers will increase by an average of 20%, thanks largely to new machines and work systems that have enhanced productivity.
- YUM has opened its first KFC outlet in Zambia.
- U.S. food costs will rise 3-4% this year, unchanged from February’s estimate, according to the Department of Agriculture. The increase would be the fastest since 2008.
- Robusta coffee may rise 23% to its highest in at least three years because supply from Vietnam, the biggest producer of the coffee bean, will decline as demand from roasters is acclerating, according to F.O. Licht.
- DRI highlighted gasoline prices as a significant headwind on its earnings call on Friday.
- KKD gained 4.9% on accelerating volume.
- WEN declined 1.2% on accelerating volume. I retain my positive outlook on WEN.
- WEN was upgraded today from “Neutral” to “Buy” at Roth Capital. The firm’s price target, per Bloomberg, is now $8.
- DRI decined 5% on accelerating volume. Poor performance from Olive Garden is a concern; traffic could be sacrificed for margin as commodity inflation weighs on Red Lobster.