That means that restaurants that are "heavy salad" concepts, like California Pizza Kitchen and Cheesecake Factory, will pay the price, according to the report, which also singles out rising spot corn prices that "rose to their single-day limit" in response to the cold weather. Higher corn prices "will likely eventually result in higher costs for chicken," the Cowen and Co. report points out. However, most chains that rely heavily on chicken have already lined up their contracts for this year and locked in prices, so Cowen is not changing its outlook for those firms.
The report from Cowen was one of the first to examine some of the myriad implications of the cold weather in California, which experts estimate will cause $1 billion in damage to crops. California Gov. Arnold Schwarzenneger has proclaimed a state of emergency in nearly a dozen of the state's most heavily agricultural counties, but the full impact of the freezing weather is yet to be determined.
In addition the lettuce crop, the state's other vegetable crops have suffered as well, which also could boost prices of ingredients used by many restaurants. Specialty items like avocados have been damaged too, and the state's citrus crop has been hit especially hard by the cold weather, with some experts estimating that up to three-quarters of the citrus will be ruined.
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