Tuesday, a piece of news about a case confirmed mad cow disease in California unnerved many people. As perception is much more important than the true risk, some restaurant businesses will experience instant demand shock.
Here's a list of businesses that may be see the negative impact soon:
Restaurants such as McDonald's (MCD), the largest burger restaurant chain, will see negative demand in its full line of beef burgers. Its chicken and other food may partly compensate that. This will be similar to food processors such as Tyson Foods Inc. (TSN), Sara Lee (SLE), etc. They should see negative demand in their beef related products. Their chicken or turkey related products will partially compensate the loss.
Beef central business such as Darden Restaurants' (DRI) Longhorn Steakhouse, Ruth's Hospitality Group (RUTH), and Nathan's Famous (NATH) will almost instantly feel the pain.
Here's a list of beef related businesses:
Ticker | Name | Market Cap | industry |
Adecoagro S.A. | 1300 | Farm Products | |
Alico Inc. | 168.95 | Farm Products | |
Bridgford Foods Corp. | 83.9 | Meat Products | |
TSN | Tyson Foods Inc. | 7030 | Meat Products |
Smithfield Foods Inc. | 3510 | Meat Products | |
B&G Foods Inc. | 1100 | Processed & Packaged Goods | |
SLE | Sara Lee Corp. | 12880 | Processed & Packaged Goods |
American Lorain Corporation | 47.57 | Processed & Packaged Goods | |
O'Charley's Inc. | 216.84 | Restaurants | |
Benihana Inc. | 230.85 | Restaurants | |
J. Alexander's Corp. | 51.66 | Restaurants | |
RUTH | Ruth's Hospitality Group Inc. | 256.26 | Restaurants |
NATH | Nathan's Famous Inc. | 92.5 | Restaurants |
DRI | Darden Restaurants, Inc. | 6510 | Restaurants |
Some businesses will benefit at the expense of beef related business, especially those focusing on chicken or pork.
For example, chicken farm Pilgrim's Pride Corp (PPC) should see a huge benefit. Restaurants such as Yum! Brands' (YUM) KFC chain, AFC Enterprises (AFCE), which owns Popeye's restaurants with dominantly chicken based food, might see increased demand as people shy away from beef.
Other businesses that may benefit from people's fear of beef are as follows:
Ticker | Name | Market Cap | Industry |
Zhongpin, Inc. | 411.25 | Food - Major Diversified | |
Sanderson Farms, Inc. | 1180 | Food - Major Diversified | |
PPC | Pilgrim's Corp. | 1590 | Meat Products |
Seaboard Corp. | 2330 | Meat Products | |
SFD | Smithfield Foods Inc. | 3510 | Meat Products |
Golden Enterprises Inc. | 39.45 | Processed & Packaged Goods | |
CPO | Corn Products International Inc. | 4420 | Processed & Packaged Goods |
YUM | Yum! Brands, Inc. | 32560 | Restaurants |
AFCE | AFC Enterprises Inc. | 419.39 | Restaurants |
Buffalo Wild Wings Inc. | 1620 | Restaurants | |
BNHN | Benihana Inc. | 230.85 | Restaurants |
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PPC over the next 72 hours.
