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    MARKET EDGES

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Last week, the USDA lowered its food inflation forecast for 2009 by 0.5% to reflect the decline in prices for meat, eggs, dairy, cereal and baking products. Despite these declines, food prices are still expected to increase by at least 4% in 2009 (marking the third consecutive year that food prices have increased by 4%). The USDA left unchanged its forecast for 2008 food prices, which are expected to rise 5.5%, the largest increase in two decades.

Specifically, 2009 beef, pork and poultry estimates were lowered and are now forecasted to grow 3% and the forecast for dairy prices were reduced to up 2.5%. That being said, commodity inflation pressures should begin to moderate on a YOY basis in calendar 2009, but will still remain at historically high levels. Gas prices, which are down 40% YOY, should help from both a cost standpoint as added fuel surcharges begin to decline and from a customer demand perspective.

The tables below highlight specific casual dining companies’ commodity exposure and their most recent cost outlook for fiscal 2008 and fiscal 2009.