Restaurant sales

Dining out: restaurant sales in December decline, ending a year of crisis

Sales in American bars and restaurants further eroded in December 2020 as the industry ended the year still grappling with the COVID-19 pandemic.

December restaurant sales fell at a double-digit rate year over year, dropping for the third month in a row and ending a year of crisis for the restaurant industry. The National Restaurant Association said restaurant and foodservice sales for the full year of 2020 were $ 240 billion below expected levels. Sales fell 21.2% year-on-year in December, declining at a faster pace than in the previous two months.

“The restaurant industry has slipped into a double-dip recession – long before it even recovered from the initial recession last spring,” the National Restaurant Association said in a Jan. 15 report. “As a result, the road to recovery for the restaurant industry has lengthened further.”

Food services and drinking places cut nearly 400,000 jobs in December, pushing the industry to 2.5 million jobs below its pre-coronavirus employment level, said the commercial group. Meanwhile, shares of most of the biggest publicly traded restaurants rose in the month ended December 15.


Sales of food services and drinking places in December fell 21.2% from the same period last year to seasonally adjusted $ 51.17 billion, according to advanced monthly estimates from the US Census Bureau published on January 15.

The decline in food and beverage services sales in December on a year-over-year basis was greater than the 16.6% year-over-year decline in November and the decline of 14.4 % year over year in October. On a monthly basis, restaurant sales for December were down 4.5% from November, the National Restaurant Association reported.

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Overall, retail sales fell more than expected for the month as the coronavirus weighed on consumer spending. Retail sales in December were down 0.7% from the previous month to $ 540.92 billion, seasonally adjusted.

United States President-elect Joe Biden’s new pandemic relief package includes a proposal for the government to partner with restaurants to feed families in need and help put laid-off restaurant workers back at work. The National Restaurant Association applauded the package but warned that certain provisions like increasing the minimum wage or removing tip wages could do more harm than good. Via Twitter, the Independent Restaurant Coalition praised Biden’s “repeated and outspoken support for direct assistance to independent restaurants and bars.”

The number of diners sitting in the United States was down 60.4% year-over-year on January 14, restaurant reservation platform OpenTable reported.

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Job losses

Food services and drinking places lost 372,000 jobs in December for a total of 9.8 million jobs, or 19.3% less than a year ago. Food services and drinking places held 10.2 million jobs in November.

Food services and beverage sales ended 2020 with nearly 2.5 million jobs, or 20%, below their pre-pandemic employment level, according to the National Restaurant Association. The restaurant industry suffered more job losses than any other sector at the start of the pandemic in March and April, the trade group said. A sharp increase in hiring followed which marked the start of a recovery in restaurant employment in May and June, but the pace of job growth slowed from July to October before stagnating in November, said the National Restaurant Association.

“After a positive start, 2020 has turned into a devastating year for restaurant staff,” the National Restaurant Association said in a Jan.8 report. “Restaurants have been hit harder than any other industry during the pandemic and still have the longest recovery to pre-coronavirus employment levels.”

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According to S&P Global Market Intelligence, ten of the top 15 U.S. publicly traded restaurants posted stock gains in the month ended Jan. 14. More generally, the S&P Composite 1500 Restaurants sub-index rose 1% and the S&P Composite 1500 index rose 4.6%.

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Shake Shack Inc. shares rose 32.2% for the month ended Jan. 14, the biggest gain for the period. The company’s average weekly and comparable store sales continued to recover in the quarter ended December 30, Shake Shack said in a January 12 press release. Digital sales remained at around 59% of Shake Shack’s sales, and the company plans to accelerate development of new locations in 2021.

Shares of The Wendy’s Co. fell 7.1% for the month ended Jan. 14, the biggest loss for the period. Wendy’s International LLC, a subsidiary of Wendy’s, and Flynn Restaurant Group have entered into separate purchase agreements with NPC International Inc., the largest franchisee of Wendy’s and Pizza Hut in the United States, for the sale of the assets of NPC, according to a January 7 press release. Wendy’s would acquire the remaining Wendy’s restaurants from NPC and transfer the right to acquire the restaurants to five existing Wendy’s franchisees. The agreements pave the way for NPC to complete its Chapter 11 restructuring, the statement said.


The odds of publicly traded restaurant companies defaulting on debts within a year were little changed from the previous month, except for one outlier.

A Jan. 15 analysis of the one-year probability of default scores identified 14 US public restaurants with scores ranging from 10.8% to 24.1%, and corresponding implicit credit scores of “ccc-” to “ccc +”, according to data from Market Intelligence. In addition, one company, Amergent Hospitality Group Inc., had a one-year probability of default of 43.1% and an implied credit rating of “cc”. In comparison, the same analysis carried out on November 17 showed a range of 10.4% to 24.1% for 15 companies. The analysis is based on the business risk, industry and financial risk of each company and is primarily based on data released through public documents.

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Amergent owns, operates and franchises the Little Big Burger, Burgers Grilled Right, American Burger Company and Hooters fast and full-service restaurant brands. Amergent is the product of the merger of the restaurant business of Chanticleer Holdings into a newly created corporate entity. As of Sept. 20, Amergent’s insufficient working capital stood at $ 8.9 million, the company said in a Nov. 23 filing with the SEC. “The company’s current operating losses, combined with its working capital deficit and uncertainties about the impact of COVID-19, raise substantial doubt about our ability to continue as a business,” the file says. Amergent did not respond to a request for comment.

Potbelly Corporation had a 24.1% chance of defaulting over the next 12 months again, and Noodles & Company’s chance of defaulting in the next 12 months was again 21.2%. Neither company responded to a request for comment.

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S&P Global’s Fundamental Probability of Default Model provides a fundamental view of credit risk for businesses by assessing both business risk – including country risk, sector risk, macroeconomic risk, business competitiveness and business management – as well as financial risk, such as liquidity, profitability, efficiency, debt servicing capacity and leverage. For a more in-depth look at the model, see the Fundamentals of the PD model – Public enterprises white paper.