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.
Howard Penney
Managing Director