Now, several of the largest restaurant companies in the U.S. are struggling with capacity restrictions on indoor dining and attempting to lure customers with takeout in a bid to avoid financial disaster.
The owners of chains like Outback Steakhouse, Applebee’s and The Cheesecake Factory are on a newly updated list of national restaurants that are facing the highest likelihood of not paying back their debts. When companies default on loans, they are often forced to file for bankruptcy protection, close locations or occasionally liquidate.
One chain, California Pizza Kitchen, already filed for Chapter 11 bankruptcy protection with plans to close some locations.
Analysts are particularly concerned about the coming winter, which will eliminate outdoor seating options for many restaurants, and the demise of the extra $600 in unemployment benefits that had been available for jobless Americans. Congress is currently debating whether to extend those benefits.
“The odds that the largest publicly traded U.S. restaurants will default fell in recent months as states allowed businesses closed by the coronavirus pandemic to reopen,” S&P says in the new report. “But the ongoing financial hits from the virus and uncertainty over whether laid-off consumers will receive expanded unemployment benefits continue to pressure the industry as more companies enter bankruptcy.”
Sales at restaurants and bars fell 26% in June, compared with a year earlier, according to S&P.
But some are faring better than others.
In contrast to sit-down chains, publicly traded fast-food companies are holding up well, in large part due to robust drive-through offerings. For example, McDonald’s has a less than 1 in 200 chance of defaulting, according to S&P.
- Dave & Buster’s
- Outback Steakhouse parent Bloomin’ Brands
- The Cheesecake Factory
- Applebee’s and IHOP
- BJ’s Restaurants
Source: USA Today