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December 19, 2012 at 08:47 AM
NEW YORK (AP) — Shares of restaurant chains were mixed Wednesday after a Wedbush analyst noted that some were better positioned to weather the impact of rising costs for ingredients and new health care regulations.
Analyst Nick Setyan noted that transaction growth in the industry is likely to remain muted next year, limiting the ability of restaurant chains to raise prices to offset rising commodity and health care costs.
He said he anticipates margins could be impacted by between 1 percent and 3 percent from new health care regulations stemming from the Patient Protection and Affordable Care Act (PPACA), which will require large businesses to provide coverage to workers starting in 2014. Setyan noted that companies with more franchised locations, such as Dunkin Donuts’ parent company Dunkin’ Brands Group Inc., will not be as impacted as those with more company-owned locations.
Dunkin’s shares were up 34 cents, or 1 percent, at $33.16.
Setyan also noted that Panera is self-insured, making it best positioned to avoid impact from the regulations. He upgraded the fast-casual chain to “Outperform” from “Neutral,” also citing its potential for sustained sales growth at restaurants open at least a year. The metric is a key gauge because it strips out the impact of newly opened and closed locations.
