Profiting from inflation: What does Wall Street tell us?

Wondering how gas prices are affecting dining habits in the US? Let’s take a look at stock performance in the quick service restaurant (QSR) sector, compared with family casual/grill and bar.

McDonald’s stock has nearly doubled in price since this same week in 2005, going from $30.99 a share to $60.16 as of Wednesday’s close.

Interestingly, unleaded gasoline prices have done the same, going from $2.32 a gallon this week in 2005 to a record US average price of $4.11 yesterday, according to AAA. Pretty strong correlation. Not causation, but consider some additional evidence.

Over that same period, Brinker International (owner of Chili’s) stock has fallen from $27 to $18. DineEquity, the parent company of IHOP that acquired Applebee’s last year has fallen even more precipitously.

The Street tends to price value appropriately. There are exceptions, but these performances seem to line up with fundamentals.

That is, fast and cheap is better when most-not all, but most-people are on tight budgets and tight schedules that are tightening daily due to inflation and our culture of busy-ness.

The plight of Chili’s, et al, is a reminder that food marketers must react quickly to unanticipated changes.

We can all learn from watching these two markedly different parts of the foodservice sector. It’s a good lesson in finding opportunity within challenges. We can’t just throw up our hands and say, “Well, it’s just tough. Our business model isn’t built for this kind of market.” We have to find ways to compete.

We can do it. Let’s talk about it.