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Takeaway: We remain bearish on $DRI, $BLMN, and $TXRH

The Bureau of Labor Statistics released CPI data for the month of September this morning.  The spread between CPI for Food at Home versus Food Away from Home continues to grow.  Inflation in the restaurant check is far-outstripping inflation in the grocery aisle.

The advantage that restaurants enjoyed over grocers in 2011, in terms of lower price increases year-over-year, has reversed.  Restaurants’ pricing power is much-diminished.  As CPI for Food at Home decelerated to 0.8% in September, CPI for Food Away from Home continues to grow at 2.8%. 

CPI DATA REMAINS BEARISH FOR RESTAURANTS - food at home vs food away from home

Casual Dining

As we wrote in our recent post, “RELATIVE VALUE MATTERS FOR CASUAL DINING”, our research indicates that the Restaurant Value Spread, or difference between CPI FAH and CPI FAFH, is highlighting downside risk for casual dining same-restaurant sales expectations.

CPI DATA REMAINS BEARISH FOR RESTAURANTS - cd rvs

Howard Penney

Managing Director

Rory Green

Analyst