THE HEDGEYE BREAKFAST MONITOR
MACRO
Corn traded sharply lower yesterday after the USDA released its projection for higher-than-expected inventories in 2012. Goldman is out this morning reducing its three-month corn forecast to $6.30 a bushel from $6.85. Goldman also reduced its forecasts for soybeans and wheat. Corn prices coming down will help future COGs margin for restaurant and food processor stocks but, in the case of restaurants, the benefit will take some time to flow through to the P&Ls as inventories and contracts are worked through.
SUBSECTOR PERFORMANCE
QUICK SERVICE
CMG: Chipotle was upgraded to Outperform from Market Perform at William Blair.
SBUX: Starbucks named in patent infringement suit over mobile payment app.
NOTABLE PERFORMANCE ON ACCELERATING VOLUME
DNKN: Dunkin’ traded up yesterday along with most of the coffee sector (PEET and GMCR traded lower). The official DNKN IPO lockup ends in 6 trading days.
COSI: Cosi shareholder Royce & Associates filed a 13G. Their position is unchanged. It should be noted that the new CEO was granted 1,000,000 shares. No other details appear to be available on her employment contract.
CBOU: Caribou gave a very strong presentation at the ICR conference. Along with CMG, CBOU is the only company that had the unit economics to justify growth.
DPZ: Domino’s has been trading strongly for some time but slowed yesterday. Some concerns have arisen related to FX headwinds. Barclay’s raised its Price Target from $26 to $28 following the Investor Day.
CASUAL DINING
NOTABLE PERFORMANCE ON ACCELERATING VOLUME
RUTH: Ruth’s Chris gave a preannouncement of sorts yesterday at the ICR Conference, saying that the fourth quarter was an exciting time.
BBRG: Bravo Brio also gave a fairly robust presentation at ICR.
BJRI: BJ’s did not say anything new at ICR and continues to be the darling of the small cap growth crowd
PFCB: PFCB has been trading well lately but our view is that investors will need to see solid results before buying in en masse again. The company is aware of the issues facing its brand but whether or not the company has the right strategy to remedy the problems is up for debate.
Howard Penney
Managing Director
Rory Green
Analyst
