Restaurant sales

At the restaurant: Restaurant sales heat up in September but lack heat from previous months

US bar and restaurant sales in September continued to rebound from pandemic-induced declines earlier in the year, although the pace of growth remained slower than in previous months.

Food services and drinking places also added jobs at a moderate pace in September, suggesting that a longer recovery may be in store for the restaurant industry. The restaurant industry has seen different sectors fare better than others, with businesses focusing on how best to operate in a changing environment.

Meanwhile, shares of most of the largest publicly traded restaurants rose in the month ended Oct. 15.

Sales

Food services and drinking places sales fell 14.4% from the prior year period to a seasonally adjusted $55.60 billion, according to the U.S. Census Bureau’s monthly advance estimates released on May 16. October. improvement from August’s 15.7% and July’s 19.3% year-over-year decline.

All retail sales rose 5.4% from a year earlier in September to $549.26 billion, better than the 3.8% year-on-year increase on the other recorded in September 2019.

September sales rose 2.1% from August’s seasonally adjusted volume of $54.47 billion, which in normal times would represent a robust increase, but was only about half of the gains made in July. and August in volume and dollar percentage terms, according to the National Restaurant Association. Restaurant and bar sales in September remained nearly $10 billion, or 15%, below their pre-coronavirus levels in January and February, the trade group said.

The fact that overall consumer spending rose in September as restaurant sales growth slowed suggests that many consumers may have shifted their spending from restaurants to other categories during the month, the National said. Restaurant Association.

“If this trend continues in the coming months, it likely means the restaurant industry’s recovery will take even longer,” the trade group said of slowing restaurant and bar sales growth. in September compared to other retail categories such as clothing stores and department stores. stores.

August sales at full-service restaurants, the last available, were down 25.1% from a year ago, following a 29.7% decline year-over-year in July said Jake Bartlett, an analyst with Truist Securities, in an Oct. 16 report. LLimited-service restaurant sales in August, meanwhile, rose 5% year-over-year after rising 0.4% from a year ago in July, Bartlett said.

The number of diners seated in the United States was down 40.3% year-over-year, restaurant reservations platform OpenTable reported. That’s more than the worst days of the pandemic as states continue to slowly ease restrictions on seating capacity.

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Works

Food services and drinking places added 200,300 jobs in September for a total of 10 million jobs, down 17.6% from a year ago. The jobs added in September come after a downwardly revised increase of 104,300 jobs in August, which means restaurant and drinking establishment payrolls are still down 2.3 million jobs from the peak in February, the National Restaurant Association said in an Oct. 2 report. Job gains in August and September were just a fraction of the 3.5 million jobs added in the first three months following the coronavirus shutdowns, the National Restaurant Association said.

“This recent downturn represents further evidence that the restaurant industry’s return to pre-coronavirus employment levels will likely be measured in years, not months,” the National Restaurant Association said in its May 2 report. October.

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Share the prices

According to S&P Global Market Intelligence, eleven of the 15 largest publicly traded U.S. restaurants posted stock market gains in the month ended Oct. 15. More broadly, the S&P Composite 1500 Restaurants sub-index rose 3.3% and the S&P Composite 1500 index edged up 2.7%.

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Shares of The Wendy’s Co. rose 13% for the month ended Oct. 15. The chain announced Oct. 7 that it was offering new technology from The Coca-Cola Co. in its stores that enables contactless, mobile beverage pouring by letting customers scan a QR code with their smartphone. On September 1, Wendy’s announced plans to add a pretzel and bacon pub cheeseburger to its menu, which resonated with customers, Stephens analyst James Rutherford said in an October 13 report. .

Shares of Cracker Barrel Old Country Store Inc. fell 8.5% in the month ended Oct. 15. The chain announced Sept. 15 that its fourth-quarter comparable restaurant sales were down 39.2% from a year ago, below expectations for a 37.2% drop, according to S&P Capital IQ. . Despite improving breakfast sales, this part of the day remains the toughest for Cracker Barrel, and while outdoor seating has contributed to capacity constraints, weather will be the deciding factor in whether length of time outdoor dining can mitigate some of the capacity headwinds, Gordon Haskett Research Advisors analyst Jeff Farmer said in an Oct. 9 report.

Vulnerability

The odds that listed restaurant companies will default on their debts within a year have changed little from the previous month.

An Oct. 15 analysis of one-year PD ratings identified 15 U.S. public restaurants with ratings ranging from 22.4% to 8.7% and corresponding implied credit ratings of “ccc” to “ccc+,” according to data from Market Intelligence. By comparison, the same analysis performed on September 15 showed a similar range of 22.4% to 8.4%.

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The three public catering companies estimated most likely to default were the same with the same ratings from the previous month’s analysis. Potbelly Corporation again had a 22.4% chance of defaulting over the next 12 months. Brinker International Inc. had a 16.4% chance of defaulting next year, and Noodles & Company again had a 16.2% chance of defaulting. Potbelly and Brinker did not respond to requests for comment.

A spokesperson for Noodles & Company returned a request for comment on the company’s October 1 release of its preliminary fiscal third quarter results. The company reported that system-wide comparable restaurant sales increased 0.4% for the five weeks ended September 29, following a 4.7% decline in the four weeks ended August 25 and down 8.2% in the four weeks ended July 28. As of Sept. 29, Noodles & The Company held $7.6 million in cash and had borrowings of $44.0 million, the company said.