*Several of the largest restaurant companies in America are facing bankruptcy or struggling to pay debts amid COVID-19.
Restaurants across the nation are struggling with the capacity restrictions on indoor dining. USA Today reports that Applebee’s and The Cheesecake Factory are on a newly updated list of national eateries facing a grim financial future. California Pizza Kitchen had to file for Chapter 11 bankruptcy protection, and plans to close some locations, according to the report.
“The odds that the largest publicly traded U.S. restaurants will default fell in recent months as states allowed businesses closed by the coronavirus pandemic to reopen,” S&P says in the new report. “But the ongoing financial hits from the virus and uncertainty over whether laid-off consumers will receive expanded unemployment benefits continue to pressure the industry as more companies enter bankruptcy.”
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Quarantine Q #457: Where is your happy place? This is ours. ?
Order your favorites at https://t.co/QOhGf9lB8P pic.twitter.com/au7YnH5tZM
— calpizzakitchen (@calpizzakitchen) July 23, 2020
Below is a breakdown of the six largest restaurant chains most likely to default, via USA Today.
Dave & Buster’s
This chain has a 16.1% chance of defaulting in the next year, according to S&P. It has the worst credit rating among the nation’s largest restaurant companies.
Outback Steakhouse
This chain faces a 13.2% chance of defaulting. But the company said it was moving in the right direction, with more than $500 million dollars in liquidity on hand.
“Across our U.S. portfolio, we experienced consistent weekly sales momentum throughout the second quarter as we adapted to this evolving environment. This improved sales recovery, coupled with disciplined cost management, enabled us to generate positive cash flow for the month of June,” the chain said in the statement.
Denny’s
Denny’s faces an 11.9% chance of defaulting. But CEO John Miller said in a July 28 statement that “we believe we are well-positioned to effectively navigate further impacts of the pandemic while preparing for eventual and future growth.”
The Cheesecake Factory
The company faces an 11.7% chance of defaulting on its debts, according to S&P.
Applebee’s and IHOP
Dine Brands Global, which owns both chains, has an 11.3% chance of defaulting. In the month leading up to July 26, sales at Applebee’s locations fell 18.4%, compared with a year earlier, while sales at IHOP declined 37.6%.
BJ’s Restaurants
BJ’s Restaurants, known for its pizza and beer, has a 9.3% chance of defaulting.
Read the full report here.
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