by Andrew Zatlin
[…] The Deflation Expectation
On recent earnings calls, restaurant chains were quick to declare that margins were safe thanks to a deflationary environment. For example, 40% of Denny’s (Nasdaq: DENN) non-labor costs are beef and eggs and the company has have locked in prices for the rest of the year slightly below last year. Denny’s, Jack in the Box (Nasdaq: JACK), El Pollo Loco (NASDAQ: LOCO) and many other restaurant chains guided for strong margins thanks to deflation.