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Food and Restaurant Industry Split About Donald Trump Presidency

Source: Dow Jones News
By Julie Jargon and Annie Gasparro
Food is food, but investors in companies that serve it at restaurants are viewing the election of Donald Trump differently than those who invest in businesses that package and sell it to supermarkets.

The restaurant industry's lobbying group said it expects President-elect Trump to lift regulations it says have stifled growth and to spur spending.

"I think Trump's win will be great for the economy. I think we'll see real GDP [gross domestic product] growth and that will be great for the restaurant and retail industry," said Andy Puzder, chief executive of CKE Restaurants Inc., the privately held parent company of Carl's Jr. and Hardee's, in an interview.

Several restaurant chains, including The Cheesecake Factory, Bravo Brio Restaurant Group Inc. and Olive Garden parent Darden Restaurants Inc., had sizable share gains in midday trading Wednesday.

But shares in global packaged food and beverage companies including Mondelez International Inc., Kellogg Co. and PepsiCo Inc. fell as analysts warned of implications on global trade.

Analysts say Mr. Trump could impose trade restrictions with countries such as Mexico and China, given comments he made opposing the North American Free Trade Agreement and the Trans-Pacific Partnership.

"Potential duties on imports from Mexico could affect several companies, " notes Susquehanna analyst Pablo Zuanic. "Over the years a number of companies built plants in Mexico to supply their U.S. needs," including Mondelez and Hershey Co.

Mondelez, the maker of Oreo cookies, was specifically criticized by Mr. Trump for building a $130 million factory in Mexico that allowed it to close a Chicago plant and eliminate 600 U.S. jobs. The Illinois-based company argues it has also invested $450 million in upgrading U.S. factories since 2012.

All food makers will likely welcome any looser regulations after years of grappling with rules on everything from what they should tell consumers about where meat is sourced to labeling food made with genetically modified organisms, or GMOs.

Mr. Trump has supported the biotechnology industry, and farmers and experts say he is unlikely to impose further rules governing the use or labeling of GMOs -- a benefit to food makers who feel such labels vilify science that helps lower the cost of food. The Grocery Manufacturers Association said in a statement it is hoping for the Trump administration to support "science-based law, regulations and policies," around food.

Meanwhile, restaurants are likely cheering the possibility Mr. Trump won't increase the federal minimum wage, analysts say, even if they still face state and local minimum wage increases.

The National Restaurant Association, in a report it posted after the presidential race was called, said: "We may see relief in some of the burdensome requirements imposed on businesses and employees alike in the health care space, as well as in labor regulations (looking at you, Overtime Rule)," referring to a pending Labor Department rule that would raise the salary threshold for workers eligible to receive overtime pay.

Write to Julie Jargon at [e-mail] and Annie Gasparro at [e-mail]