Please ensure Javascript is enabled for purposes of website accessibility
COVID-19: Dave & Buster's, Outback Steakhouse & Denny's at Greatest Financial Risk
TLBBHMAP3-U010ALB5ANM-348f959abae2-512-300x300-1
By Jim Jakobs, Digital Producer
Published 4 years ago on
August 13, 2020

Share

The restaurant companies with the highest one-year probability of default scores as of Aug. 7 were Dave & Buster’s at 16.1%, Bloomin’ Brands at 13.2% and Denny’s at 11.9%. That’s according to a report by S&P Global Market Intelligence emailed to GV Wire℠.

The ongoing financial hits from the COVID-19 pandemic and uncertainty over whether laid-off consumers will receive expanded unemployment benefits continue to pressure the industry as more companies enter bankruptcy.

The largest U.S. companies least likely to default included Chipotle Mexican Grill Inc. at 0.1%, McDonald’s Corp. at 0.4% and Wingstop Inc. at 0.5%.

But, all the big publicly traded restaurant companies had their chances of default decline from the sector’s peak in April.

Dave & Buster’s

Dave & Buster’s on June 11 reported a net loss of $43.5 million for its first fiscal quarter ending May 3, missing analysts’ expectations for the period. Dave & Buster’s probability of default recently peaked at 61.5% on May 13. The company took steps to conserve cash, secure new equity capital, and rethink its operating model, Brian Jenkins, Dave & Buster’s CEO, said in a news release.

“With many competing ‘eatertainment’ concepts still struggling to reopen, Dave & Buster’s appears poised to benefit from a more favorable competitive environment post-pandemic, following several years of pressure from the rapid expansion of myriad new concepts,” Sharon Zackfia, a William Blair analyst, said in a June 12 note.

Dave & Buster’s in northeast Fresno put a temporarily closed sign in the window. (GV Wire/Jahz Tello)

Outback Steakhouse Parent Bloomin’ Brands

Bloomin’ Brands, parent company of Outback Steakhouse, recently posted what will likely be best-in-class same-store sales recovery progress since early May. Still, the company’s recovery moderated in July and demand challenges could be on the horizon for the casual dining segment in the months ahead, Jeff Farmer, a Gordon Haskett Research Advisors analyst, said in a July 24 report.

Factors that could weigh on demand include reduced federal stimulus efforts, reduced outdoor seating flexibility from colder weather, and “an election season that will intensify election coverage consumption and lead to fewer meals outside of the house,” Farmer said.

Since the time of that report, a Bloomin’ Brands spokesperson tells GV Wire℠ via email that the company has more than $500 million in liquidity, which allowed it to provide relief pay for employees without furloughs or layoffs while restaurants were closed. That liquidity would support the company beyond a year even if the company returned to its peak cash burn rate during the closures and Bloomin’ Brands is generating positive cash flow since dining rooms have reopened, the spokesperson said.

Outback Steakhouse on West Shaw and Marks. No inside dining, but takeout and delivery options are available. (GV Wire/Jim Jakobs)

U.S. Food Services and Drinking Places

U.S. restaurants are among the hardest hit businesses, with the pandemic and lockdowns forcing dining rooms to close. Sales at U.S. food services and drinking places were down 26.3% in June from the year-ago period.

U.S. banks are adjusting their exposure to the restaurant industry.

Denny’s at West Shaw and West offers outside table dining for guests. (GV Wire/Jim Jakobs)

Continuing Pressure

The pandemic upended the restaurant industry and sped up delivery and takeout trends. Smaller, independent restaurants are more at risk than the large publicly traded restaurant companies, experts say.

Dine Brands Global, which owns both Applebee’s and IHOP chains, has an 11.3% chance of defaulting according to S&P Global Market Intelligence. (GV Wire/Jahz Tello)

DON'T MISS

Ex-Correctional Officer at Women’s Prison in California Sentenced for Sexually Abusing Inmates

DON'T MISS

Caitlin Clark and Iowa Draw Nearly 5 Million Viewers for Second-Round NCAA Win

DON'T MISS

Canadian School Boards Sue Snapchat, TikTok and Meta for Disrupting Students’ Education

DON'T MISS

California Law Enforcement Agencies Obstruct Transparency Efforts in Use-of-Force Cases

DON'T MISS

When Newsom Gives His State of the State, He Should Be Candid About California’s Economy

DON'T MISS

No Police Charges for Taylor Swift’s Dad Over Paparazzi Incident in Sydney

DON'T MISS

Biden Administration to Lend $1.5B to Restart Michigan Nuclear Power Plant, a First in the US

DON'T MISS

Tonight’s Biden Fundraiser With Obama and Clinton Already Nets a Record $25 Million

DON'T MISS

Former Sen. Joe Lieberman, Democrats’ VP Pick in 2000, Dead at 82

DON'T MISS

Trump Criticizes Judge and His Daughter After Gag Order in Hush-Money Case

No data was found

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

15 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

15 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

15 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

16 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

16 hours ago

Biden’s Fundraiser with Obama and Clinton Nets a Record $25 Million, His Campaign Says

17 hours ago

Fresno Unified’s Self-Protection Racket Is Hurting Our Kids

17 hours ago

Rockin’ Out or Laughing, the Valley Has Its Pick of Weekend Events

17 hours ago

Ex-Correctional Officer at Women’s Prison in California Sentenced for Sexually Abusing Inmates

20 hours ago

Caitlin Clark and Iowa Draw Nearly 5 Million Viewers for Second-Round NCAA Win

20 hours ago

PGA HOPE at Riverside Golf Course Introduces Military Veterans to the Game

PGA HOPE, now underway at Fresno’s Riverside Golf Course, is designed to introduce golf to veterans and active duty military members t...

14 hours ago

PGA HOPE at Fresno's Riverside Golf Course
14 hours ago

PGA HOPE at Riverside Golf Course Introduces Military Veterans to the Game

15 hours ago

Cronenworth’s Big Hit Helps Lift the Padres to a 6-4 Win Over Melvin’s Giants

15 hours ago

Shohei Ohtani Reaches 3 Times in Home Debut as the Dodgers Rout the Cardinals 7-1

15 hours ago

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

15 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

15 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

16 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

16 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

MENU

CONNECT WITH US

Search

Send this to a friend