Stephens Recaps Key Commodities Affecting Restaurants, States August Was 'Mixed'

Beef Prices

Choice beef prices rose 2.5 percent in August, but finished the month down a little over 2 percent year-over-year. Ground beef prices were down "slightly," but remain inflated by 8 percent year-over-year. Meanwhile, cattle on feed prices ended the month flat year-over-year, while total cold storage levels are up 25 percent from a year ago.

The analyst pointed out that the companies with largest beef exposures include Texas Roadhouse Inc TXRH at 43 percent, Del Frisco's Restaurant Group Inc DFRG at 33 percent and Darden Restaurants, Inc. DRI at 20 percent.

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Chicken Prices

Moving on to chicken, boneless/skinless breast meat rebounded "meaningfully" from last month's 12.5 percent decline, but are still down approximately 20 percent year to date. Traditional wing prices fell 4.5 percent in August, but are still 9 percent higher than they were a year ago.

The analyst noted that August's year-over-year comparison has improved sequentially during the last four months, from highs of nearly 30 percent year-over-year in May.

Fiesta Restaurant Group Inc FRGI has the largest exposure to chicken at around 44 percent. Buffalo Wild Wings BWLD exposure is mixed at 20 percent breast meat and 20 percent wings. Bojangles Inc BOJA's exposure stands at 38 percent.

Pork Prices

According to Slabaugh, sow prices rose "sharply" in August by 25 percent, but are still "meaningfully" lower from peaks seen last spring. At the same time, average retail pork prices are down by a high-single digit percentage point year over. Finally, total cold storage levels for pork are up 20 percent year-over-year.

Bob Evans Farms Inc BOBE has the largest exposure to pork at around 20 percent, followed by Denny's Corporation DENN at 15 percent and Bojangles at 10 percent.

Grains And Others

Finally, Slabaugh stated that corn, wheat and soybeans are all trading near some of the lowest levels seen since 2010. Dairy continues to trade "favorably," with block cheddar and milk prices down 29 percent and 8 percent, respectively year-over-year.

Seafood prices remain "broadly lower," while coffee futures are trading nearly 40 percent lower than they were this time last year.