Restaurants could see their margins squeezed as inflationary pressures return to the commodity markets, especially as the chains find it harder to wean customers off a steady diet of meal deals.
Analysts expect higher ingredient and energy costs for restaurants in 2010, with inflation returning to normal levels after a year when costs increases moderated and, for some items, fell from year-ago levels. That could make it harder for chains to continue with the aggressive stream of coupons, buy-one- get-one-free offers and other promotions to bring customers into their doors.
"There's no sign of a pullback yet on discounting,"Barclays Capital analyst Jeffrey Bernstein said in an interview. But, "if you see a return to inflation in 2010, it'll prove more challenging to offer these deals."
Frugal Consumers Could Squeeze Restaurants As Costs Rise
![Frugal Consumers Could Squeeze Restaurants As Costs Rise Frugal Consumers Could Squeeze Restaurants As Costs Rise](https://media.potatopro.com/high_food_prices_2.jpg?width=1200&height=743&crop=smart&mode=crop)
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