The Cheesecake Factory, Dave & Buster’s and the parent company of Outback Steakhouse may be in serious financial trouble, according to a new report.
In the report, released Aug. 10, data analysis company S&P Global Market Intelligence identified a number of restaurants that have a high probability of defaulting in the next year.
Topping the list is Dave & Buster’s at 16.1%, followed by Bloomin’ Brands at 13.2%. Bloomin’ Brands subsidiaries include Carrabba’s Italian Grill, Outback Steakhouse and Bonefish Grill. Third and fourth on the list are Denny’s and The Cheesecake Factory at 11.9% and 11.7% probability respectively.
Government mandates and decreased spending on dining in the midst of the coronavirus pandemic has led to less than favorable sales for nearly all restaurants across the U.S. Some, including California Pizza Kitchen and the parent companies of Chuck E. Cheese and Sweet Tomatoes, have already filed for bankruptcy. Others, like Starbucks, McDonald’s and Dunkin’ have shuttered thousands of retail locations. TGI Friday’s, Denny’s and IHOP have also closed hundreds of restaurant locations.
According to Yelp, more than 15,000 restaurant locations have permanently closed across the country as of July 10.
“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,” the S&P report reads. “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.”
Franchisees may be in the worst situation.
“Franchisees, primarily privately held ones, in some instances have less access to capital or could have taken on too much debt before the pandemic,” the S&R report reads, citing research analyst James Rutherford.
According to the report, Chipotle, McDonald’s, Wingstop and Papa John’s are the largest U.S. companies that are least likely to default.
See the full report here.