"We will implement a higher level of menu-price increases in our upcoming summer menu change if commodity-cost pressures continue at the current level," Benn said.
Food Quality
Cheesecake Factory, BJ's and McDonald's are among a group of "haves," according to Steve West, an analyst at Stifel Nicolaus & Co. in St. Louis. These are restaurants that can push through moderate price changes, though they likely won't be menu-wide, West said. He includes Chipotle Mexican Grill Inc. in this group because it has focused on improving food quality and the customer experience during the recession.
"If anyone has pricing power, it's Chipotle," said West, who maintains a "buy" rating on the stock.
The Denver-based burrito chain, which McDonald's spun off in 2006, will wait to raise prices until the third quarter, allowing it time to "see the magnitude and timing of inflation and assess the customer reaction to price increases at other restaurants," Chief Financial Officer John Hartung said on an April 20 conference call.
The restaurant industry will serve as a test of the retail sector's pricing power, Maki said.
'Stronger Position'
"Consumers are in a stronger position now because their labor income has been improving, but the surge in gasoline prices has moderated the recent growth in their purchasing power," Maki said.
For Yum! Brands Inc.-the Louisville, Ky.-based owner of KFC, Pizza Hut and Taco Bell fast-food chains-potential price changes in this environment are a balancing act, Chief Financial Officer Richard Carucci said on an April 21 conference call.
"When you have inflation and our sales are soft, you have to play it pretty smartly," Carucci said.