Wendy'/Arby's Group, the third-largest fast-food company in the U.S., sells a lot of beef and bacon. And these days, that presents a bit of a challenge.
Beef and bacon costs have gone up recently, chief financial officer Steve Hare told analysts Tuesday at a conference in Las Vegas. He called the increases "troublesome."
Chatter about rising commodity costs is becoming more common in the restaurant industry. Beef and cheese costs are up, and with corn prices rising, analysts are keeping a sharp eye out for price increases on chicken. A large portion of the cost of a chicken is corn feed.
In the last few quarters, chicken prices have actually helped many restaurant companies, because they had longer-term contracts that locked in lower prices, said Sara Senatore, an analyst with Sanford C. Bernstein. But with the price of corn spiking because of strong demand and poor weather in some growing regions, "eventually that's going to trickle into protein (prices)," she said.
Tony Lavely, chief marketing officer at Atlanta-based Church's Chicken, said the company sees considerable upward pressure on corn prices. "But we have business tactics to make sure we aren't disadvantaged by that," he said.
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