In September, YoY CPI growth for Food at Home increased by 30 basis points versus August to 6.3%.  CPI for Food Away from Home fell to 2.6% in September from 2.7% the month prior.


Food costs are now the key line item in Americans’ P&L’s according to WMT’s commentary during its earnings call two months ago.  BLS data released this morning detailing the Consumer Price Index in September suggests that the spread between food at home inflation and food away from home inflation grew wider for a tenth consecutive month. 


As we have written before, as long as grocery inflation continues to outstrip price increases in restaurants, it should be a positive for comparable sales trends at restaurant chains.  Whether or not restaurant margins can withstand the pressure or not, however, remains to be seen. 


The Knapp Track data, as we wrote about on Monday morning, suggests that the third calendar quarter finished strongly for casual dining.  The CPI data released today provides another bullish data point for the restaurant space with respect to traffic; to the extent that the more severe inflation in the grocery aisle relative to the restaurant dissuades people from eating at home, it is a positive for restaurants’ guest counts.  However, it is important to note that effective food prices remain high for many restaurant companies.  Despite spot prices for most foodstuffs declining recently, contracts and inventories need to be worked through in order for companies’ margins to derive any benefit, or relief, as inflation subsides.




Howard Penney

Managing Director


Rory Green


SECTOR SPOTLIGHT | Live Q&A with Healthcare Analyst Tom Tobin Today at 2:30PM ET

Join us for this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more