- Trade groups estimate that up to 30% of restaurants could permanently close because of the pandemic.
- A report from S&P Global Ratings released on Friday identified 15 publicly traded restaurant chains that are most likely to default.
- Well-known restaurant chains that have already filed for bankruptcy include CEC Entertainment, the parent company of Chuck E. Cheese; Garden Fresh Restaurants; and Le Pan Quotidien’s U.S. arm.
As the coronavirus pandemic upends the restaurant industry, some chains that were already struggling financially have been pushed into bankruptcy.
Trade groups estimate that up to 30% of restaurants could permanently close because of the pandemic. While independent restaurants are more at risk, dining room closures and consumers eating more at home has also strained chains, particularly those in the casual dining sector.
The Paycheck Protection Program provided many restaurants, including large chains like P.F. Chang’s and Five Guys, with much needed funds to continue operating. But coronavirus cases are once again surging, causing governors to once again close dining rooms to customers.
The crisis will likely change the restaurant industry forever. Experts say that the pandemic and related health concerns may prove to be the death knell for buffet-style restaurants, and the once-thriving “eatertainment” segment is under pressure.
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A report from S&P Global Ratings released on Friday identified 15 publicly traded restaurant chains that are most likely to default. Kisses From Italy, a casual dining chain whose shares are trading for 10 cents, topped the list, with a 41.2% chance of defaulting within the next 12 months. Muscle Maker, with a 36.9% chance of default, and Giggles N’ Hugs, with a 34.3% chance, came in second and third place.
Starbucks, Denny’s and Yum Brands made the S&P list with a much smaller probability of default in a year: all came in under 10%.
But franchisees of large fast-food chains are also struggling. Operators across chains like McDonald’s, Wendy’s and Yum Brands’ Taco Bell received millions in PPP loans. NPC International, Pizza Hut’s largest U.S. franchisee, filed for Chapter 11 on July 1 after struggling with its debt burden.
Source: CNBC