Wendy's stock slipped in the afternoon after a USDA forecast said farm production costs may keep rising and push ingredient prices higher. Jack in the Box moved down too. For restaurant operators, the warning points to another stretch without relief on food-input costs.
USDA's 13% fertilizer revision
The USDA's latest forecast projects that total production costs for major crops will continue to rise, with some fertilizer estimates revised up by as much as 13%. Fuel, lube, electricity, and fertilizer all climbed in the model, which means the input bill tied to food production keeps moving higher before food even reaches a kitchen.
That matters for chains that buy into those ingredient pipelines every day. If crop costs stay elevated, restaurant menus do not have to reprice immediately for margins to feel the pressure; the squeeze can show up first in supplier bills and later in lower room to absorb promotions, labor, and other expenses.
Jack in the Box at $11.53
Jack in the Box was trading at $11.53 a share and remained 38.4% below its level at the start of the year. The stock has also had 60 moves greater than 5% over the last year, a reminder that it can swing sharply when a macro read-through hits the sector.
An investor who put $1,000 into Jack in the Box five years ago would now be looking at only $94.86. That kind of drawdown leaves little cushion when a new cost forecast raises the odds that restaurant operators will be paying more for inputs instead of seeing the relief that had looked possible after earlier food-away-from-home data showed only 0.3% growth in May.
May CPI and World Cup traffic
May CPI data showed food away from home rising only 0.3%, and 12 days before this afternoon's move Jack in the Box had gained 4.3% on that read and on World Cup-related traffic expectations. Later in the week, the World Cup kicked off across host cities in the U.S., Mexico, and Canada, running through July 19.
The complication is that the broader inflation shock had been concentrated in energy, not food costs or labor, yet the USDA forecast still points to higher farm production costs that can work their way into ingredient prices. If that input trend holds, the pressure lands first on restaurant operators' margins, then on what they can promise investors about the next quarter.
