Restaurant sales

Dining Out: US Restaurant Sales In November Stung By Cold And Pandemic

Sales in American bars and restaurants in November fell from the previous month as rising COVID-19 cases resulted in tighter restaurant restrictions and temperatures plummeted across the country. Experts see tough conditions for restaurants persist for months.

The total number of jobs in food services and drinking places fell in November for the first time in months, casting further doubts over the imminent recovery of the restaurant industry and its workers.

Meanwhile, shares of most of the biggest publicly traded restaurants rose in the month ended December 15.

Ringing and stumbling money

Sales of food services and drinking places in November fell 17.2% from the same period last year to $ 53.20 billion seasonally adjusted, according to advanced monthly estimates from the US Census Bureau published on December 16.

The year-over-year decline in beverage and food service sales in November was worse than October’s 14.6% year-over-year decline and 14.3 decline % from year to year of September. On a monthly basis, November restaurant sales were down 4%, or $ 2.2 billion, from October, suggesting that the recovery in restaurant sales has not only stalled, but has likely fallen into a “recession.” double-dip, ”according to the National Restaurant Association.

All retail sales rose 4.1% from the period last year in November to $ 546.50 billion, which is higher than the 3.3% growth in all sales in the United States. retail in November 2019. Retail sales in November were down 1.1% from the previous month.

The restaurant industry’s year-over-year comparable sales for the week ending November 29 were the worst on record by the industry since mid-July, according to the Black Box Intelligence report of December 11. . It was the third week in a row that year-over-year sales growth declined from the previous week, Black Box said in its report. While most segments of the restaurant industry are struggling with negative same-store sales growth, quick service restaurants and quick-casual restaurants recorded positive same-store sales growth during the week ending. on November 29, according to Black Box.

As winter sets in across the country, more and more restaurants are experiencing silent nights.

The arrival of colder weather in the United States is likely one of the reasons for the drop in sales, as fewer restaurants are able to offer outdoor dining, Black Box said. At the end of November, 52% of full-service restaurant operators said their restaurant offered alfresco dining on-site in spaces such as patios, terraces or sidewalks. This figure was down from 74% in early September. Limited-service restaurants are also withdrawing from their alfresco dining, dropping from 60% offering it in September to 40% in November.

“With the cold weather affecting much of the country, an increasing number of outdoor tables are empty,” said the National Restaurant Association.

New England, the Western region, New York and New Jersey are among the regions with larger sales declines, while warmer places like the Southeast, Florida, Texas and the Southwest have generally better comparable sales, according to Black Box.

As outdoor meals wither, the increase in coronavirus cases in the United States has prompted localities and state authorities to crack down on indoor dining, something the Centers for Disease Control and Prevention have linked to higher positivity rates for COVID-19.

As of December 14, indoor dining had been suspended in 10 states and a number of populous cities such as New York, Baltimore, and St. Louis, with nine more states enforcing curfews for indoor dining. , according to a Dec. 15 report from Gordon. Jeff Farmer, analyst at Haskett. Indoor dining suspensions have negatively impacted traffic to restaurants, Farmer said.

California experienced one of the biggest sales declines for the week ending Nov. 29, likely due to a spike in coronavirus cases, Black Box said. Most of California has been ordered to stay at home, which only allows restaurants to offer take out and deliveries. New York Governor Andrew Cuomo has banned indoor dining in New York City effective December 14.

Foot traffic and sales declines are expected to worsen for the remainder of 2020 and into early 2021 as the pandemic worsens in the United States and the number of indoor meal suspensions or covers. fires are increasing, Farmer said. It is difficult to say whether optimism about the vaccine rollout will outweigh the growing challenges in the near term, Farmer said.

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The number of diners seated in the United States was down 72.4% year-over-year on December 15, an improvement from lows in March and April, but down from the worst day in November On November 30, when the number of diners seated was down 66% from a year ago, restaurant reservation platform OpenTable was reporting.

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Job losses

After six months of consecutive monthly job gains, the restaurant industry shed jobs for the first time since April.

Food services and drinking places lost 17,400 jobs in November for a total of 10.19 million jobs, 16.4% less than a year ago. Food services and drinking places also held 10.21 million jobs in October. Food services and beverage sales remained at 2.1 million jobs below their pre-pandemic levels, the National Restaurant Association said. Half of restaurateurs expect their workforce to decline in the next three months, and only 5% of restaurateurs plan to increase their workforce in the next three months, according to a National Restaurant Association survey in November. .

“There does not appear to be a significant catalyst for a resumption of restaurant job growth in the immediate future,” the National Restaurant Association said in a Dec. 4 report. “With increasing restrictions on indoor dining and the likelihood of significantly reduced holiday celebrations, trading conditions will remain extremely difficult over the next few months. “

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Stocks are heating up

According to S&P Global Market Intelligence, fourteen of America’s top 15 publicly traded restaurants posted gains in their shares in the month ended Dec. 15. More generally, the S&P Composite 1500 Restaurants sub-index rose 4.6% and the S&P Composite 1500 index jumped 3.6%.

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Shares of Chili’s Grill & Bar owner Brinker International Inc. rose 16.6% for the month ended Dec. 15, the largest increase in the period. Chile’s comparable sales and traffic have been better than the overall casual dining industry, Stephens analyst James Rutherford said in a Dec.16 report. Brinker, which also owns Maggiano’s Little Italy, withdrew its fiscal guidance for the second quarter of 2021 on Dec. 16 as its restaurants are affected by dining room closures and capacity restrictions. Chili’s had positive traffic in October, but restrictions in response to the increase in COVID-19 cases will prevent Brinker from realizing his plans for the quarter, Wyman Roberts, CEO of Brinker, said in a press release.

Brinker reported on December 16 that comparable sales of the company-owned Chili’s fell 1% for the month ended October 28. The figure was down 3.9% for the week ended Nov. 4 and has worsened every week since. Comparable sales of the company-owned Chili’s were down 12.3% for the week ended December 9.

Shares of Domino’s Pizza Inc. fell 1.3% for the month ended December 15, the biggest loss for the period. The pizza chain announced on December 14 that it would give more than $ 9.6 million in special bonuses in December to hourly workers and drivers in its stores and supply chain.

Vulnerability

The odds of publicly traded restaurant companies defaulting on debts within a year are little changed from the previous month.

A December 15 analysis of the one-year probability of default scores identified 15 US public restaurants with scores ranging from 10.4% to 24.1%, and corresponding implicit credit scores of “ccc-” to “ccc +”, according to data from Market Intelligence. By comparison, the same analysis performed on November 17 also showed a range of 10.4% to 24.1%. 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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Two of the three state-owned catering companies estimated most likely to default were the same as in the previous month’s analysis.

Potbelly Corp. Again had the highest odds with a 24.1% chance that she would default in the next 12 months, the same odds she might in the previous month’s report. Potbelly did not respond to a request for comment.

Noodles & Co. again had the second highest probability of default over the next 12 months at 21.2%, the same figure as the month before. Noodles did not respond 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.