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Sozzi: 7 Bone Crushing Realities for Anyone Eating Out This Summer

Stocks in this article: BWLD DENN PNRA MCD DPZ

NEW YORK (TheStreet) -- Save those digital pennies guys - taking a Tinder-sourced date to Buffalo Wild Wings (BWLD - Get Report), Denny's (DENN - Get Report), Panera Bread (PNRA - Get Report), McDonald's (MCD - Get Report), Domino's (DPZ - Get Report) and other eateries will cost much, much more this summer. While beef, dairy, chicken, and avocado price inflation have dominated the headlines of late, there are three surprise ingredients that will whack your wallet in one way or another.

Sugar: after reaching a three and a half year low in January of this year, sugar prices have rebounded to the tune of 15%. Might want to swap that sweetened iced tea for tap water at the table.

Tomatoes: due to persistent drought conditions in California, tomato prices are expected to increase by at least 20% this year. Coupled with the aforementioned spike in beef, chicken, and dairy prices, dollar menu shepherds McDonald's and Burger King (BKW) could be staring at an entire list of loss leaders on the drive-thru board.

Cocoa: make sure to order a heavy dinner so there's no desire for a chocolate-themed dessert. Cocoa prices have gained 12% from January. Hershey (HSY) and Cheesecake Factory (CAKE) can't be too thrilled by this development.

What will restaurant operators likely do to protect their profit margins? Don't instantly think the action plan involves immediately boosting menu prices:

  • Portion sizes could be shrunk.
  • Recipes may be reworked to include fewer ingredients.
  • Menu items could be completely removed.
  • Yes, menu prices will head higher, something already outlined by Chipotle (CMG) (3% to 5% increase pre-summer) and McDonald's (2% increase).

Score one for those owning a farm and able to sustainably raise their own food.

-- By Brian Sozzi CEO of Belus Capital Advisors, analyst to TheStreet.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

At the time of publication, Sozzi held no position in the stocks mentioned.

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