Input Costs Spike, Food Outlooks at Risk, Tailwinds for HSY, MDLZ, Food Service Friday Cost Factor

By Jonathan Feeney and David Schick and David Katzman and Jack Hermann Published on November 7, 2025 PDF

November 07, 2025

Optimal Advisory Friday Cost Factor

Cost Factor up 3.0% last week. Natural gas leads energy spot cost spike, while cocoa, coffee & chicken wings bring relief. We think spot commodity tailwinds are key determinants of upcoming 2026 guides for several consumer sectors. None more than food (costs +2.1% w/w, -9.1% y/y) where volume is weak & some leaders (e.g. GIS) are counting on cost relief to fund net price reductions. All tracked company sectors saw spot costs rise this week. See Fig 1-8. Cost headwinds: THS (+1.5% w/w, +10.5% y/y), CELH (+1.0% w/w, +6.4% y/y); Cost tailwinds: HSY (+0.9% w/w, -15.2% y/y), wing restaurants (-12.2% y/y)

Energy spikes on natural gas tailwind y/y. Colder than expected temperatures drove a natural gas spike (+5.6% w/w) this week, heating up an otherwise benign energy complex (+3.4% w/w, +4.0% y/y). Cost headwinds: CHD (+3.5% w/w, -3.4% y/y), PG (USA +2.5% w/w, +0.7% y/y)

Cocoa settles after last week’s index kerfuffle. An expected bumper crop in West Africa put the brakes on cocoa prices (-2.7% w/w, -45.3% YTD) — fast on the heels of last week’s index inclusion driven spike. We note Mondelez CFO Luca Zaramella mentioned in early September that cocoa pod count in Africa was +7% vs. the 5-year norm. Cost tailwinds: HSY (9.9% EBIT tailwind y/y), MDLZ (+6.5% EBIT tailwind y/y)

Restaurant level input costs up +0.7% on week, down -2.0% y/y. Lower protein costs (-21.1% y/y), especially chicken wings (-43.7% y/y) are bringing relief to all 7 of our restaurant level indices. We also note the backdrop of decelerating growth (+3% vs. +6% recent trend) in restaurant labor costs. Due to differing business models & cost sharing, we show restaurant level input cost pressure by type, not weighted for restaurant tickers. See Fig 8-9.

In this weekly note, we identify spot input costs’ putative impact on the U.S. consumer value chain, most measurably impacting staples, staples retailers, restaurants & food service. Optimal’s proprietary cost factor weights ticker & sector specific cost trends using a proprietary formula based on 32 trackable spot cost inputs – 23 of which are updated as of last night, the other 9 latest available.

Figure 1: Weekly Cost Factor Summary

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 2: Weekly Cost Factor Margin Context

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 3: Weekly Input Commodity Performance By Group

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 4: Biggest Input Cost Movers y/y

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 5: Food Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 6: Beverage Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 7: HPC Sector Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 8: Restaurant Level Cost Factor

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, USDA, BEA

Figure 9: Restaurant Employment Cost Index

Sources: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, BLS

Figure 10: Staples Sector Theme Box

Figure 11: Market Sector Performance

Sources: Optimal Advisory Proprietary Analysis, Bloomberg

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