Seeking Alpha

Labor pressure seen for California-heavy restaurant chains

|About: Del Taco Restaurants, Inc. (TACO)|By: , SA News Editor

BTIG warns on the impact of higher wages on select restaurant chains.

"We expect mid-single-digit wage inflation in 2020 as 24 states raise the minimum wage and operators compete for talent. Once again, we expect California will lead the way on inflation as the minimum wage rises 8.3% to $13 per hour on its way to $15 by 2022," writes analyst Peter Saleh.

The firm sees Del Taco (TACO -0.6%), Jack in the Box (JACK -0.3%) and Cheesecake Factory (CAKE -1.1%) as exposed due to their high mix of California outlets. All three are lined up with Neutral ratings.

In a broader look at the restaurant sector, BTIG thinks the Summer Olympics and Presidential debates will clip some restaurant traffic later this year.