US foodservice company Performance Food Group has lowered its second-quarter earnings outlook because of an unexpected rise in lettuce prices brought on by fastfood restaurants adding salads to their menus.
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Performance Food said the rise in demand for lettuce, as fastfood chains such as McDonald’s expanded their salad offering, exceeded both its own and growers’ expectations, resulting in high open-market prices, reported Reuters.
The company said it now expects second-quarter earnings of between 48 and 49 cents per share, compared to previous guidance of between 50 and 52 cents per share.
A Reuters poll of Wall Street analysts revealed an average estimate of 51 cents per share.
Performance Food said the increased demand for salad meant that its contracted lettuce supplies were not enough and the company was forced to make additional purchases on the open market at higher prices. The company said this would cost it around 3 cents per share in second-quarter earnings, but it should make up the additional costs through the balance of the year.
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By GlobalData
