Restaurant sales

Dine out: US restaurant sales in October stall as harsh winter sets in

Sales at U.S. bars and restaurants stalled for another month in October as states tighten pandemic-related restrictions and the industry prepares for an even tougher winter with limited outdoor dining options.

The rate at which food services and drinking places added jobs in October suggests a full recovery won’t occur until late 2021 at the earliest, the National Restaurant Association said in a Nov. 6 report.

Meanwhile, shares of most of the largest publicly traded restaurants rose in the month ended Nov. 16.

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Food services and drinking places sales in October fell 14.2% from the year-ago period to a seasonally adjusted $55.63 billion, according to the U.S. Census Bureau’s monthly advance estimates released November 17. was comparable to September’s 14.3% year-over-year decline and improved from August’s 15.8% year-over-year decline.

All retail sales rose 5.7% from the year-ago period in October to $553.33 billion, which was higher than the 3.1% growth in all sales in detail in October 2019.

October restaurant sales marked the first month-over-month decline since April, when the industry began to bear the brunt of pandemic food restrictions. The October figure of $55.63 billion was lower than September sales of $55.70 billion, according to a preliminary Census Bureau estimate. Many restaurants, especially those offering drive-thru, delivery and take-out operations, have shown resilience in the face of a difficult environment. Still, sales at restaurants and drinking places remained nearly $10 billion below their pre-coronavirus levels posted in January and February.

“October’s sales decline is a worrying sign for the industry, as the month likely included some of the last outdoor dining opportunities in many parts of the country,” the National Restaurant Association said in a report from the November 17. “Taking into account the indoor dining restrictions that are currently being reimposed in some jurisdictions, it becomes clear that the winter months will represent an extremely challenging time for restaurants that rely on on-site operations.”

The restaurant industry’s comparable year-over-year sales for the week ending Nov. 1 were the industry’s worst in the past 10 weeks, according to a Black Box Intelligence report from the November 13. restaurant sales and are expected to continue to do so, particularly if government regulations begin to tighten, Black Box said in its report.

In California, where authorities say rising coronavirus cases threaten to overwhelm the state’s health care system, most restaurants have had to effectively close their dining rooms as the state pulls the emergency brake on its economy to stop the spread of the virus. Companies affected by the California restrictions include Denny’s Corp., which owns 24% of its stores in California, and Dine Brands Global Inc., which owns 14% of its IHOP locations and 8% of its Applebee locations in California, according to a report. of November 2. 16 report by Truist Securities analyst Jake Bartlett.

On Nov. 11, New York announced a 10 p.m. curfew for bars and restaurants. Restaurants can still offer curbside, pickup and delivery after 10 p.m., but cannot serve alcohol for takeout. New York Governor Andrew Cuomo has said places that serve alcohol are one of the top three areas where coronavirus cases are spreading.

“While the industry is operationally better prepared today than in March, a second shutdown is likely to have significant repercussions amid uncertainty regarding the timing of reopening and government assistance,” said Lauren Silberman, Credit Suisse analyst, in a report published on November 2. 13. “Landlords seem unwilling to provide much relief as they also face challenges with high vacancy rates.”

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The number of diners seated in the United States fell 57.5% year-over-year on November 16, an improvement from the slump in March and April, but close to the November low of 60 .6% year-over-year posted on November 16. 3, which was also Election Day, restaurant booking platform OpenTable reported.

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Employment grows slowly

Food services and drinking places added 192,200 jobs in October for a total of 10.2 million jobs, down 16.1% from a year ago. October marked the sixth straight month of job gains for the sector, but the pace of job growth was much slower than the sector’s rebound in the spring, and food services and beverage sales remained 2.1 million jobs behind pre-pandemic levels, the National Restaurant Association said.

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Share the prices

According to S&P Global Market Intelligence, nine of the 15 largest publicly traded U.S. restaurants posted stock market gains in the month ended Nov. 16. More broadly, the S&P Composite 1500 Restaurants sub-index rose 1.3% and the S&P Composite 1500 index jumped 4.5%.

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Shares of Aramark, a foodservice provider, rose 24.7% for the month ended Nov. 16, the biggest gain of the period. Aramark reported an adjusted fourth-quarter loss per share of 35 cents on Nov. 17, just below analysts’ consensus average estimate for a normalized loss per share of 34 cents, according to S&P Capital IQ. The company expects organic revenue to improve in fiscal 2021.

Shares of Chipotle Mexican Grill Inc. fell 5.9% in the month ended Nov. 16, the biggest drop in the period. The company announced October 21 third-quarter results that beat expectations. Chipotle announced Nov. 11 plans to open its first digital-only restaurant offering only pickup and delivery orders.

Vulnerability

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

A Nov. 17 analysis of one-year default probability scores identified 15 U.S. public restaurants with scores ranging from 10.4% to 24.1%, and corresponding implied credit scores of “ccc-” to “ccc+ according to data from Market Intelligence. By comparison, the same analysis performed on October 15 showed a range of 8.4% to 22.4%.

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The three public catering companies estimated most likely to default were the same as those in the previous month’s analysis.

Potbelly Corporation again had the highest rating with a 24.1% chance it could default over the next 12 months, down from a 22.4% chance it could default from the previous month’s report. . A Potbelly spokesperson said the company was confident in the strength of the business.

Noodles & Company had a 21.2% chance of defaulting over the next 12 months, down from a 16.2% chance of defaulting since the last report. Brinker International Inc. had a 16.3% chance of defaulting over the next 12 months, which was similar to its 16.4% chance of defaulting since the last report. Noodles and Brinker did not respond to requests for comment.