For a sport that just a few years ago was the darling of the blue-chippers, NASCAR has suddenly found love as hard to come by as a meth-addled octogenarian. After Anheuser-Busch (NYSE: BUD) dropped its 25-year long title sponsorship of the race promoter's second-tier series, Subway seemed a lock to take it on.

Now comes news that the restaurant's ardor for the series has cooled, and NASCAR has been forced to revisit formerly spurned suitors such as KFC (NYSE: YUM), Allstate (NYSE: ALL) and Dunkin' Donuts (D'OH!).

Along with the decline in interest has come a drop in price. The value of the sponsorship, once thought to run $30 million a year, has been halved. NASCAR is not the only loser in that drop; the original price included a mandatory ESPN ad buy of around $10 million, a requirement that has been relaxed.

According to Michael Smith in the Sporting News, Subway balked at the lack of exclusivity, a constant source of tension in the race industry where teams, tracks, OEMs and suppliers are also hustling sponsorships for every nut, bolt and beer cozy in the paddock.

NASCAR fans skew 60-40% male, slightly above the U.S. average in the 35-44 year of age category. They are overrepresented in the lower income categories, which would dampen the interest of luxury product companies. One interesting statistic is its popularity among America's fastest growing minority -- Hispanic fans have grown from 3.6% to 8.6% in only a few years. So how about the Taco Bell series? Or The Chipotle (NYSE: CMG) 500?

Zale Corporation (NYSE: ZLC) September implied volatility Elevated at 38. ZLC, an operator of 2,300 retail jewelry stores, closed Monday at $22.02. Goldman Sachs says, "We are downgrading ZLC to Sell from Neutral as growing macro headwinds, management upheaval, and poor strategic positioning will likely further pressure earnings." Signet Group (NYSE: SIG), a specialty jewelry retailer, terminated merger talks with ZLC in June 2006. ZLC overall option implied volatility of 38 is above its 26-week average of 30 according to Track Data, indicating larger price risks.

YUM! Brands (NYSE: YUM) implied volatility Elevated into Analyst meeting. YUM closed Monday at $32.72. YUM will host investor meetings in Beijing on September 6-7. Smith Barney has a Buy rating and $38 price target on YUM. SBSH says "YUM's China business is material to the overall business TODAY, representing about 20% of company-wide revenue and 23% of profits." YUM overall option implied volatility of 31 is above its 26-week average of 24 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Yum Brands Inc. (NYSE: YUM) reported a better than expected quarter with the international division leading the way. U.S. sales were basically flat, but the international division drove revenues up 12% year-over-year, and earnings up 13%. The Street was expecting an 11% increase.

Yum Brands suffered a serious set back in the New York City market in late 2006 when a Taco Bell restaurant had an E.coli outbreak and over 70 patrons became ill. The Taco Bell/KFC brand suffered another setback when a television crew in New York City filmed rats running in and out of the restaurant. Yum Brands has certainly taken the steps to prevent either situation from ever happening again, but the public image perception will take more time to change.

Due to the two unfortunate situations, same-store sales for the quarter were a negative 3%, mostly attributed to Taco Bell's negative 7% sales growth. KFC and Pizza Hut posted positive same-store sales, not enough to offset Taco Bell's results though.

Yum has found its sweet spot in the international division. The company is on track to open up 800 new units overseas this year, 375 of those in China. The Chinese market has been quite receptive to the Yum brands of Taco Bell, Pizza Hut and KFC. The margins are as strong in the international markets and the room for aggressive growth is certainly prevalent.

Yum is executing on its strategy and should finish the year with earnings of $1.63 per share. For 2008 the company is endorsing $1.81-1.84. The upside to the numbers could come from the various concepts building strong same-store sales in the United States. The jury, however, is still out if the company's image has been re-built to the level it enjoyed before the nasty New York City incidents.

Georges Yared is the Chief Investment Strategist of Yared Investment Research.

Yum! Analysts and investors alike eagerly gobbled up the first quarter earnings surprise for Yum! Brands (NYSE: YUM), sending the stock up 6%, to $66.91 as of late afternoon, an increase of $3.79. The shares were briefly over $69, an all-time high for the company. The 70 cents-per-share profit was a 14% increase from the year-ago quarter and six cents ahead of analyst consensus.

The favorable results are even more of a surprise given that Yum! has taken several hits with its brands this year, from a rat infestation at a combined Taco Bell/KFC restaurant in New York to a lawsuit over the E-coli outbreak of Q4 2006, and has yet to discover any benefit from the removal of trans fat at its KFC restaurants.

Despite all the world's concentration on the obesity epidemic, the rise in popularity of organic foods, and the general frowning-upon marketing of fast food and other unhealthy choices to children; it seems like a great time to be the owner of some fast food stock.

[Photo kanepsphotography.]

After dealing late last year with an E. coli outbreak which was initially thought to trace back to raw green onions, Taco Bell -- a division of Yum! Brands (NYSE:YUM) -- is being summoned to court. The Southern California farm responsible for harvesting said controversial (but in fact perfectly fine) green onions has filed a libel lawsuit, alleging that the fast food company continued to attribute the outbreak to the farm's green onions, even though the produce was not contaminated.

An attorney for Boskovich Farms has said that "Taco Bell engaged in an irresponsible and intentional crusade to save its own brand at the expense of an innocent supplier." This move ultimately cost the Farms "millions of dollars in business."

A Taco Bell spokesperson said the fast food company was merely acting in the interest of safety for its customers. "We believed green onions may have been the source based on the presumptive positive testing, so we immediately removed them from our products . . . we later learned they were not the source of the E. coli outbreak." Later analysis indicated that lettuce was the likely source of the outbreak, but not before green onions were stripped from all items at the company's 5,800 worldwide locations. Lettuce still remains in about 70% of the Taco Bell menu items.

The breakout, which caused more than 70 people in the Northeast to fall sick, cost the chain an estimated $20 million in operating profit.

In early trading, YUM shares are virtually unchanged.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

As a city dweller, believe me, I know. There are few things more disgusting than rats. I've dealt with rats in my parking garage where, much to our horror, we found evidence of rats rummaging around our Ford Taurus. When there was construction on my street, I was afraid to use the sidewalk at night for about six months one year for fear of having a furry rodent scurry across my shoes. Most recently, a soup kitchen and food pantry near my home suffered a rat infestation and had to shut down to clear the beasts out.

Rats are a fact of life in the city. As horrifying as each of these incidents were, they were eventually brought under control. The truth is, rats, cockroaches and other vermin can be controlled. And in a well-managed business or building, they should never get out of control.

That's why the recent, much-publicized rat infestation in a Greenwich Village KFC/Taco Bell (the restaurant chain is a division of Yum! Brands, Inc. (NYSE:YUM)) was so shocking. There probably are a few rats scurrying around in the sub-basements of many buildings in the city. But these rats were able to make it upstairs, in broad daylight. And so many of them! Some reports put the tally at dozens scurrying around.

For business owners, there are lots of lessons in this sorry tale. Here are a few of them -- followed by some rat-related information that may prove useful if you ever have to fight a rat infestation yourself:

Ignore a problem and it's bound to get bigger. As Michael Fowlkes wrote on BloggingStocks, the company initially deemed this a "temporary escalation" of what was previously understood to be a more ordinary rat problem.

A remarkable sight this morning unfolded in New York City as a dozen or so rats were caught on tape running wild through a KFC/Taco Bell today.

It seems that after local news stations heard about the rat sightings they flocked to the store to catch the rodents having their way around the restaurant. The rats were taped running between counters and tables and climbing on children's high chairs. Yikes, definitely not a good scene.

While today's rat race is definitely a disturbing event, it really shouldn't come as much of a surprise to the restaurant owners. Back in December when the store had a health inspection they were giving a passing grade but the inspectors noted at that time that there was evidence of rat droppings in the store.

The store has been closed until the store is completely re-sanitized and given a clean bill of health. According to a statement from KFC/Taco Bell construction in the basement on Thursday "temporarily escalated the situation."

Hmm... temporarily escalated the situation?? What is that all about? It makes me wonder what the normal rat situation is like for the restaurant.

The chains are owned by parent company Yum Brands, Inc. (NYSE:YUM) which is trading down 0.7% to $60.64 down $0.42.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

Bowing to the pressure from former SEC Chairman turned activist investor Richard Breeden, Applebee's International Inc. (Nasdaq:APPB) has put itself for sale. Investors aren't finding much to like about other casual dining chains either.

The Cheesecake Factory Inc. (Nasdaq:CAKE) has tanked 27 percent over the past year., P.F. Changs China Bistro Inc. (Nasdaq:PFCB) are down 20 percent over the past year. Darden Restaurants Inc. (NYSE:DRI) parent of the Olive Garden, is up about 3 percent, while Ruby Tuesday Inc. (NYSE:RI) is up about 4 percent not including its run-up today on the news about Applebee's.

Have Americans grown tired of cheesy chain restaurants or did these chains grow too fast? Whatever the reason, Wall Street seems to prefer tried and true fast-food chains over their more expensive counterparts.

McDonald's Corp. (NYSE:MCD) reported a 4.9 percent increase in comprable same-store sales in January. Applebee's, which reports earnings tomorrow, had a 5.8 percent decline during the same period. Its shares are up 23 percent. Yum Brands Inc. (NYSE:YUM), up 19 percent. had a strong fourth quarter despite of the Taco Bell scare.

In the war for cheap eats, breakfast is about to become the front line. McDonald's Corporation (NYSE:MCD) is about to roll out a dollar menu for morning staples like the sausage muffin with cheese and a breakfast burrito with two hash browns. Burger King Holdings, Inc. (NYSE:BKC) won't be far behind and is expected to have 10 items for a dollar on its breakfast menu this spring. (No word, though, on when and whether these items will be available all day long.)

If you're a believer in fast food, believe that Wendy's International (NYSE:WEN), whose value menu is legendary for its variety, will be jumping on this bandwagon soon. Already the breakfast market seems to be the Mealtime to Be of 2007, what with Starbucks Corporation (NASDAQ:SBUX) hoping to complete its rollout of eggy cheesy breakfast sandwiches by mid-2007, and, according to the Motley Fool, the news that Yum Brands' (NYSE:YUM) Taco Bell is also exploring a breakfast menu.

Who will reign supreme? How will this effect the companies' respective bottom lines? Neither McDonald's nor Burger King breaks out revenue by mealtime or menu item, so it's hard to say what percentage breakfast is of the overall sales. It's equally hard to predict how this would affect profitability -- certainly, it could diminish franchisee profits somewhat, but it's likely to increase overall sales. Breakfast is the mealtime of the future for fast food, and although McDonald's leads the way in the consumer's mind, with so many possible entrants into the $1 breakfast, it's anybody's game.

Yum Brands' (NYSE:YUM) Taco Bell now says that the food at all of its restaurants is safe. The green onions suspected as the source of the recent E. coli outbreak in the northeast are gone, and the company has switched suppliers in the region. Over 50 people have ended up in the hospital as a result of the E. coli outbreak, but there is hope that the worst is past, despite the fact the bacteria has surfaced in a Taco Bell in New York City.

The question is why E. coli continues to be such a threat to consumers throughout the country. In today's New York Times, Eric Schlosser addresses the issue. Schlosser is the author of Fast Food Nation, a fascinating and at times alarming look at the fast food industry and its place in American culture. He argues that changes in the way food is produced in the US over the last 40 years have raised the odds of widespread outbreaks of E.coli and other food-borne pathogens.

One big change is the concentration of producers. Food in the US is now produced by a few large corporations, rather than many smaller ones. For example, today 13 slaughterhouses produce most of the meat eaten by Americans. This means that once there is a problem, it tends to spread far and wide within a large company's national network. Years ago, when producers were smaller, problems in the food supply chain would remain local.

The second big change is in the food safety system. Large food corporations have fought relentlessly to reduce the number and frequency of federal inspections. In the 1970s, the Food and Drug Administration made 35,000 food safety inspections per year. Today, there are less than 3,400. And the number of inspectors has fallen by roughly 20%.

So the solution to the problem seems fairly obvious. Given the growth of the food network, we need more food safety inspectors. And there needs to be real penalties for producers who break the rules. This runs contrary to the American suspicion of government, but if the government doesn't monitor the safety of the food system, who will? As Schlosser writes, "whether you're a Republican or a Democrat, you still have to eat." And eating without worrying about E.coli seems like something worth paying for.

Today, Taco Bell ordered all of its stores to stop using green onions in its fast food. Taco Bell, a unit of Yum Brands Inc. (NYSE: YUM), does not have conclusive proof that green onions are the source of a recent E. coli breakout in its stores in Pennsylvania, New York and New Jersey. But given that green onions have been linked to such outbreaks in the past, the company decided to stop serving the savory bulb as a matter of caution.

Ben Berkowitz blogged about this earlier this week. He actually suffered through an E. coli infection as a child, and reminds us how serious this can be. Children have died from the bacteria in the past, so extreme caution is well-advised.

The larger question is why E. coli outbreaks have become a regular feature of the American food system. Is it an inevitable product of how food is produced in the U.S.? Farming in the U.S. is now dominated by large corporations and industrial methods. Waste from massive feed lots inevitably contaminates fruit and vegetables through shared irrigation systems. And industrial meat processing seems to increase the infection of meat. It may be that the whole system needs more careful monitoring and regulation. It may be more expensive, but I for one would pay a little more to avoid eating an E. coli sandwich.

If you are concerned about this, or if you have recently eaten in a Taco Bell and have questions, you can call 1-800-TACO BELL to contact the company.

[Update 12-5-06, 12:00pm EST -- the trans fat ban has been passed -- there will no longer be any trans fat products used in NYC-area eateries come July 1, 2007]

New York City is set to ban the use of trans fats in restaurants soon if a new ordinance is passed today. Trans Fats taste very good but have been repeatedly shown to be damaging to health. Many chains like KFC and Taco Bell , both divisions of Yum! Brands , Inc. (NYSE:YUM) have recently said that they will ban the use of trans fats in their food offerings very soon and will replace the bad fats with other cooking alternatives that should leave little to no impact on taste -- but will be much more healthy for patrons.

While there are those who would like the choice of eating artery-clogging and health-damaging trans fats (for some strange reason), I'm glad to see a city like NYC -- which can be a large trend setter -- step up to the plate and consider a bad on a substance that is not good for anyone. Changing the food preparation process to one that does no use damaging fats to one that uses fats that are not damaging -- with negligible or no impact -- makes perfect PR and business sense.

Will this be a problem for fast food and restaurant chains that serve tons of food per day? While all this food may taste good, much of it is damaging to the health of patrons who eat it. This may contribute to the growing obesity problem in this country. I think it is all bout the *taste*. If restaurants can make this change and not change the taste of their foods (or barely change it), then the switch away from trans fats will be a non-event. If patrons sense a change in the taste of their favorite foods -- even knowing that what they eat is harmful to them -- then expect a litany of complaints to start flying from the gluttonous masses.

It started with just a couple of people at a couple of restaurants in New Jersey, but within a day or two, Taco Bells across New York and New Jersey were being shuttered as dozens came down sick with the E. coli bacteria.

No one is yet suggesting that this particular outbreak will be anything like the 1993 Jack in the Box tragedy, when four kids died from eating tainted meat. It does, however, raise questions as to how it happened and, more importantly, what the source was. Bad meat? Dirty lettuce? Sanitary procedures? (Which seems unlikely, given the distance between the restaurants).

Having had an E. coli infection myself when I was young, I can attest to how unpleasant and unfortunate it is -- think lots of pain, dehydration, lack of sleep, inability to eat. And that's in a very mild case; the sickest victims are suffering permanent kidney damage and worse.