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Margin pain on the horizon: Restaurants could get squeezed this year from a combination of...

Margin pain on the horizon: Restaurants could get squeezed this year from a combination of higher commodity costs and frugal consumers, according to AlixPartners. Though traffic is forecast to rise 3%, the average ticket is expected to decline 4.7% with coupons, promotions, and discounts gaining favor. Chains that are expected to ride out the expected tough environment are those that can deliver healthy food fast. Chipotle (CMG -1.8%), privately-held Subway, and Panera (PNRA -1.5%) fit the bill.
Comments (6)
  • CAIKEN1
    , contributor
    Comments (50) | Send Message
     
    AlixPartners obviously has interest in CMG and PNRA, not MCD!
    13 Feb 2013, 11:16 AM Reply Like
  • Zachary Richards
    , contributor
    Comments (21) | Send Message
     
    And the potential minimum wage increase that the president talked about is further going to cut margins.
    13 Feb 2013, 11:39 AM Reply Like
  • Richard Adams
    , contributor
    Comments (170) | Send Message
     
    This is why we hear the word "refranchise" so often. Chains like MCD and BKW have sold off most of their company operated restaurants so franchisees will bear the increased margin pressures. If franchisees have to raise prices there is an increase in the dollars paid to the corporate side.
    13 Feb 2013, 12:26 PM Reply Like
  • Steve Tinnes
    , contributor
    Comments (74) | Send Message
     
    You need to understand the purpose of company operated restaurants, Richard. The hold steady at 20% for a reason.

     

    McD is not in business to make the franchisee money, rather, they are in it to make McD corp money.
    13 Feb 2013, 01:38 PM Reply Like
  • Steve Tinnes
    , contributor
    Comments (74) | Send Message
     
    Just like if you rented out your house. Would you rent it for less. No.
    You would rent it so you made money.
    13 Feb 2013, 01:40 PM Reply Like
  • lukaivan
    , contributor
    Comments (26) | Send Message
     
    I agree
    14 Feb 2013, 08:45 PM Reply Like
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