Wheat Costs Chains Some Serious Bread

It could be time to take some bread off the restaurant table.

Soaring prices for wheat and other commodities that go into making bread, tortillas and baked goods will likely start hurting profits at casual dining eateries. And that comes on top of elevated prices for other commodities.

"If you are any one of the major restaurant chains, your costs of buns, bread and other breakfast items is going to rise," says Georges Yared, chief investment strategist at Minneapolis-based Yared Investment Research. "Papa John's(PZZA Quote - Cramer on PZZA - Stock Picks), Starbucks(SBUX Quote - Cramer on SBUX - Stock Picks) and McDonald's(MCD Quote - Cramer on MCD - Stock Picks), are the obvious ones."

Yared also adds to the group Chipotle Mexican Grill(CMG Quote - Cramer on CMG - Stock Picks), which he believes could provide a good shorting opportunity.

"If the commodity pricing environment remains high and stays high, I think you are taking the potential froth from any of these stocks," he says.

Other companies are already feeling the pinch. Sara Lee(SLE Quote - Cramer on SLE - Stock Picks) last week announced that it would be raising the suggested retail prices of baked goods by 5% because of the elevated costs of wheat.

The news comes hot on the heels of another 5% price hike in April. Mark Goldman, a spokesman for Sara Lee in suburban Chicago, says the firm says it has tried to be conservative with past and current price increases.

And there is plenty of good reason to believe the price strength in wheat won't be disappearing anytime soon, because the supply/demand balance is keeping the market particularly tight.

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