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Tuesday, June 28, 2011

Mid-Year Review 2011

We started the year in rally mode, hit the breaks in spring and enter the third quarter with the first signs of a correction in gas and corn prices.  We expect our employment improvement forecast in the Outlook for 2011 will be achieved despite the seasonal bumps in the road.

The Dow Jones Restaurant Industry Index is up 10% since January 1st. 


Corn prices, which have risen steadily for a year, corrected recently and this helped the restaurant index regain momentum.  We should be above 700 by year end.


If you haven't raised your menu prices to cover the costs, you will continue to experience downward pressure on gross profit.  We'd need oil prices below $75 to become optimistic.  This is possible but not a lock by any means.

As we see a renewed search for productivity gains, tech companies serving the industry should find the phones ringing in the second half of 2011.  The iPad has helped to create some buzz with menu and ordering apps joining wine list tools in the App Store.

Seasonal summer resorts should benefit from pent up demand for real vacations.  With geopolitical unrest abroad, the old fashioned American road trip could get a deep discount as gas prices fall post-Memorial Day.

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