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Restaurant bottom lines remain under pressure

In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.

Just a few months ago things were looking up. The economy was recovering, consumers were spending, we had a record corn crop in the ground and both cattle and poultry producers were looking to rebuild and expand production. But then the economy took a nose dive in the second quarter, and a drought decimated the corn crop.

Second quarter GDP growth came in at just 1.5 percent, down from 2.0-percent growth in the first quarter and 4.1-percent growth in the fourth quarter of 2011. Odds for a double-dip recession in the U.S. have increased dramatically.

Meanwhile, record-high corn prices have cattle, dairy and poultry producers rethinking any potential expansion plans. Can the restaurant industry, still reeling from the last round of recession and financial losses, survive yet another perfect storm of restrained customer spending and sky-high food costs? The year is deteriorating and restaurant bottom lines look to remain under pressure.

Contact John T. Barone at [email protected].

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