The restaurant industry continues to benefit from significantly lower commodity prices versus last year. Chicken is the only commodity that we track that is relatively flat year over year; though the prices paid by some restaurant companies are higher year-over-year.
Earlier this week, BWLD noted that the anticipated average price per pound of fresh chicken wings for July and August is $1.67 versus $1.17 for the third quarter last year. If the third quarter averages $1.67 per pound, the company expects to see a 50 bps increase in COGS versus last year (similar to the YOY impact in 2Q).
Over the last two weeks, cheese prices have moved up 12%. It should be noted that even after this significant move, cheese prices are -42% YOY quarter to date versus -40% in 1H09. Cheese prices are still favorable on a YOY basis but are worth watching, given the big move.
On the 2Q CAKE earnings call, management commented that COGS benefited by a good 50-plus bps from lower commodity costs, largely non-contracted items, such as cheese and dairy. Looking to 2H09, CAKE will likely benefit from the same trends, but that is obviously going to be dependent on what commodity costs do.