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Notable macro data points, news items, and price action pertaining to the restaurant space.

MACRO

Commodities

Supply-side uncertainty is said to be the driving force behind the raised net-long positions across eleven agricultural futures and options in the week ended August 23rd, according to Bloomberg.  Speculators increased bullish bets on agricultural commodities to the highest level since early May after adverse weather further eroded yield prospects for corn and soybeans crops in the U.S.

Subsectors

Quick Service restaurant stocks continue to outperform on all durations and the food processors continue to lag as commodity price uncertainty weighs on sentiment.  SAFM’s recently reported 3QFY11 earnings miss did little to convince investors that the sector is out of the woods.

THE HBM: DNKN, SBUX, MCD, DIN, THI, YUM, EAT - subsectors fbr

QUICK SERVICE

  • DNKN shares are pricy at current levels, according to Barron’s.  Echoing some of what we have been saying for some time, the article points out that DNKN is trading at a premium to SBUX, MCD, DIN, and THI.
  • YUM is lobbying the federal government, using a little-used provision from the 1970’s allowing states to permit restaurants for Supplemental Nutrition Assistance Program (SNAP) benefits.  The provision allows the elderly, disabled, or homeless the option of exchanging food stamps at participating restaurants.  Thus far, only a few states have opted into the program.

CASUAL DINING

  • EAT raised its quarterly dividend to 16c per share from 14c.

THE HBM: DNKN, SBUX, MCD, DIN, THI, YUM, EAT - stocks 829

Howard Penney

Managing Director

Rory Green

Analyst