SAN FRANCISCO —The outlook for second-quarter financial results, which are expected to begin flooding in this week and next from the restaurant industry’s largest public companies, is not good, according to industry observers.
With increased gas prices and declining home sales and values hurting consumer sentiment and spending, and escalated commodity and labor costs eating away at bottom lines, many operators are reeling from the one-two punch. —The outlook for second-quarter financial results, which are expected to begin flooding in this week and next from the restaurant industry’s largest public companies, is not good, according to industry observers.
“It’s been an interesting couple of weeks of mea culpas from several restaurant companies regarding the soft-sales and high-cost environment,” Andrew M. Barish, a securities analyst at San Francisco-based Banc of America Securities LLC, said in a June 29 research note. “The operating challenges remain numerous in the restaurant sector today, and all but a few [companies] will likely be [negatively] impacted.” —The outlook for second-quarter financial results, which are expected to begin flooding in this week and next from the restaurant industry’s largest public companies, is not good, according to industry observers.
Restaurant heavyweights like Starbucks, Wendy’s and The Cheesecake Factory have either reduced projections for their second-quarter and fiscal 2007 results or cautioned investors about sales trends during recent investor conferences. —The outlook for second-quarter financial results, which are expected to begin flooding in this week and next from the restaurant industry’s largest public companies, is not good, according to industry observers.
Other companies have lamented the impact of rising costs. Texas Roadhouse Inc., the Louisville, Ky.-based operator of 263 namesake casual-dining restaurants, said in late June that increased labor expenses and higher beef and cheese costs forced it to raise menu prices by at least 2.9 percent. —The outlook for second-quarter financial results, which are expected to begin flooding in this week and next from the restaurant industry’s largest public companies, is not good, according to industry observers.
Higher cheese prices, in particular, have forced pizza chains to increase their menu prices. According to reports, the Pizza Hut and Papa John’s chains both have raised the price of cheese-only pizzas to the same amount as that for one-topping pizzas at franchisor-operated restaurants. —The outlook for second-quarter financial results, which are expected to begin flooding in this week and next from the restaurant industry’s largest public companies, is not good, according to industry observers.
A “short-lived summer breeze,” as analyst Paul Westra at Cowen & Co. put it, may come in the form of lower gas prices in late summer and increased supermarket prices, which rose 4.4 percent year-over-year in May. That increase, which exceeded the average restaurant price increase of 3.3 percent, could push consumers to eat out rather than cook at home, he said. —The outlook for second-quarter financial results, which are expected to begin flooding in this week and next from the restaurant industry’s largest public companies, is not good, according to industry observers.