LOS ANGELES (Reuters) - Higher costs for commodities like beef and bacon will take a bite out of margins at Wendy’s/Arby’s Group WEN.N in the second half of 2010, an executive for the No. 3 U.S. fast-food chain said on Tuesday.
“Beef and bacon are two commodities that have been troublesome to us in this current environment,” Steve Hare, Wendy’s/Arby’s chief financial officer, said at an investor conference.
Wendy’s/Arby’s in August said its second-quarter margin at company-operated stores was 16.4 percent at Wendy’s and 13.4 percent at Arby’s.
The economic downturn forced down prices on many restaurant ingredients, which allowed operators to offer deep discounts. During that time, Arby’s introduced a value menu to make it more competitive with operators like McDonald’s Corp (MCD.N) and Burger King BKC.N.
But costs for ingredients such as wheat, beef, bacon, coffee, milk and cocoa are rising, threatening to squeeze profits at some restaurants. As a result, restaurants and food and beverage companies have begun raising prices.
Starbucks Corp (SBUX.O) and smaller rival Peet’s Coffee & Tea Inc PEET.O recently said they were raising prices to compensate for surging coffee prices.
Elsewhere, Anheuser-Busch said it was planning price increases on some of its Budweiser beers later this year.
Reporting by Lisa Baertlein. Editing by Robert MacMillan