Sector Snap: Analyst cuts restaurant price targets

Analyst Larry Miller said in a note to investors that during an RBC consumer conference last week, the majority of the attending companies were "more cautious" on their expectations for sales growth.

Miller added that a panel of experts at the conference "painted a very grim view on commodity costs for the next few years."

The analyst said beef and chicken costs could rise between 5 percent and 8 percent in 2009.

He also said although credit is still available to franchisees and companies, it is getting more expensive as lenders become more cautious.

Most of the price targets were cut $1 or $2 except for Chipotle Mexican Grill Inc. Miller slashed the company's target to $52 from $73, saying sales appeared to slow during the company's third quarter and "the situation doesn't appear to be improving."

Miller added that although the company expects to raise its prices in its fourth quarter to offset higher costs, the price increase likely won't completely counter their impact.

Chipotle shares rose 27 cents to $48.27 in afternoon trading.

The other price target cuts were for Burger King franchisee Carrols Restaurant Group Inc., McCormick & Schmick's Seafood Restaurants Inc., Ruth's Hospitality Group Inc., Starbucks Corp., Texas Roadhouse Inc., Cheesecake Factory Inc. and Yum Brands Inc., which operates KFC, Pizza Hut and Taco Bell.

Shares mainly fell in the sector, mirroring a trend in the overall market as investors continued to worry that tight credit markets will lead to a global recession.