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    MARKET EDGES

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Notable macro and industry-specific news items and price action from the restaurant space as well as our fundamental view on select names.

MACRO

  • Corn for July delivery, the most actively traded contract dropped $0.24 cents, or 3.3%, to a one-month low of $7.01 1/2 a bushel; wheat and soybean futures also tumbled at the Chicago Board of Trade. Driving prices lower was heavy selling fueled by jitters about the global economy and improving weather forecasts.
  • The Obama administration intensified a crackdown on employers of illegal immigrants, notifying another 1,000 companies in all 50 states Wednesday the government plans to inspect their hiring records, according The Wall Street Journal.

QSR

  • SBUX is hoping that new menu initiatives help to turn around the company’s UK business, which made a loss in 2010.
  • SBUX is scrambling to deal with a PR fallout after a manager of a Long Island store allegedly harassed a gay employee.  Also, the controversy surrounding the company’s switching of milk suppliers for the NYC stores is being opposed by further demonstrations at City Hall today.
  • COSI and CMG are the only two QSR names to underperform the S&P 500 over the past week.
  • On average, the QSR sector outperformed the S&P 500 by 4% this week.

CASUAL DINING

  • KONA, RRGB, MRT and MSSR are the only two FSR name to underperform the S&P 500 over the past week.
  • On average the FSR sector outperformed the S&P 500 by 2.4% this week.

TALES OF THE TAPE: SBUX, COSI, CMG, KONA, MRT, MSSR - stocks 617

Howard Penney

Managing Director