Darden Restaurants announced its financial results for the third quarter on Thursday, noting a year-over-year sales decrease of 26.1%. Darden is the group that owns brands like the Olive Garden, LongHorn Steakhouse and Cheddar’s, among many others, and those are some of the restaurants that have been able to survive the pandemic.
But looking ahead, as more places start to open up, how can various restaurants differentiate themselves and bring in that revenue?
Big chains like Olive Garden and Chili’s were able to rely on large balance sheets and access to cash, according to R.J. Hottovy, a restaurant analyst at Aaron Allen & Associates. Hottovy said some restaurants that have been getting by on takeout may see new possibilities.
“I think a lot of restaurant brands, particularly full-service brands, have a once-in-a-lifetime opportunity to reinvent themselves effectively,” he said, especially around training staff to provide good service.
Kevin Burke, an investment banker at Citizens Capital Markets, said the big restaurants will likely be able to adjust to new expectations faster. So, for the time being, they can “stock up on masks and gloves and give them to people as they ask for them for free. Markings for where you should stand, and social distancing.”
There’s no telling how long restaurants will need to do those things to make people feel safe. Matt Schulz at LendingTree recently surveyed consumers about their willingness to go out to eat. “About a quarter of people said they’d only go out with people in their immediate household,” he said.
Schulz said 20% of respondents said they would only go if they could sit outdoors.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
Will more people be working from home once the worst of the pandemic recedes?
It’s still unclear whether remote work will remain widespread, but there is at least more data analyzing the costs and benefits of working from home. People might be saving on things like commuting and buying clothes, but they’re also finding that in order to make long-term remote work feasible, they’ll have to upgrade their living spaces. And that cost could outweigh savings. Chris Stanton, a Harvard business professor, said even a minor increase in working from home after the pandemic could add up to billions of dollars a year for workers.
I’m hearing a lot about interest rates. Is it getting more expensive to borrow money?
Expectations of higher inflation as the economy rebounds have investors demanding higher yields to compensate. In turn, the recent surge in bond yields is pushing up the interest rates consumers pay on mortgages and other loans. Economist Scott Hoyt with Moody’s Analytics said rising rates could dampen demand for housing a little and refinancing a little more. Other kinds of consumer spending are less likely to be affected. Interest on auto loans and credit cards are pegged to shorter-term rates, which haven’t been rising as much.
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How will restaurants attract people dining out again? - Marketplace
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