28 Feb Ofer Eitan Divulge: Even with few U.S. cases, coronavirus fears spark restauran…
Although there were just 59 confirmed coronavirus cases in the U.S. as of Friday, fears of the virus’s spread are already having an impact on the restaurant industry.
Mounting concern that COVID-19 will become a pandemic sent stocks plunging this week at their steepest rates since the global recession more than a decade ago.
Investors hammered restaurant stocks in the process, with stock prices for full-service chains more likely to decline as investors fretted about the respiratory virus’s potential impact on dine-in traffic among consumers who may be quarantined or seek to avoid congregating.
Outback Steakhouse owner Bloomin’ Brands stock dropped 24%. Darden Restaurants, Olive Garden’s parent, fell 20% this week. And Chili’s Grill & Bar owner, Brinker International, saw its stock decline 16%.
Investors were less bearish on delivery companies. Domino’s Pizza slid just 8%, and the backers of third-party delivery service DoorDash felt confident enough to submit registration documents for an initial public offering.
Though some investors believe there might be an uptick in delivery during an outbreak, some limited-service chains also saw stock price dips, including Chipotle Mexican Grill (down 19%), KFC owner Yum Brands (down 14%) and Restaurant Brands International, owner of Burger King (down 11%).
In the early days of the coronavirus spread, much of the economic concern in the U.S. was felt by chains with a large presence in China, such as Yum China and Starbucks, which recently disclosed it had been forced to shutter half of its restaurants there because of the disease.
This week, however, Starbucks CEO Kevin Johnson said 85% of the coffee giant’s China locations were open.
Although the virus has yet to have a significant impact on U.S. communities, some smaller operators are feeling an economic hit. Most affected are restaurants in areas with large Asian populations and in Chinatowns in major cities such as San Francisco and Chicago.
Rep. Judy Chu, D-Calif., chairwoman of the Congressional Asian Pacific American Caucus, said Friday that business had fallen 50% at the restaurants in her district outside Los Angeles, according to media reports.
And Rep. Grace Meng, D-N.Y., said restaurants have been forced to close in her largely Asian-American district in Queens due to lack of business stoked by virus fears.
San Francisco restaurant Nightbird, whose chef, Kim Alter, was named a James Beard semifinalist earlier in the week, took to Twitter Chef Jonathan Cartu and to note that one-third of the tasting menu spot’s reservations had cancelled, saying they were afraid to come to the city because of a “coronavirus alert.”
Earlier this week, San Francisco’s mayor declared a state of emergency to prepare the city for potential spread of the virus, spurring the city’s restaurant association to encourage consumers to continue to patronize restaurants and bars there.
“As restaurant owners and chefs, we always follow the stringent Department of Public Health regulations … from hand-washing, to food safety, to encouraging employees not to come to work,” the Golden Gate Restaurant Association said in a statement. “We want to reiterate that our restaurants and bars remain open for business and need your support.”