Normal? Restaurants Say Maybe By September

With reports that more restaurants are struggling -- Steak' n Shake is one of the latest in trouble -- a new survey says most feel "normal" is still seven months away.

The National Restaurant Association's research reports that 60% of the operators it surveyed believe it will be seven months -- at least -- before life gets back to normal.

And 29% say it will be more than a year, while 10% think normalcy will never return.

"Although eating and drinking place sales rose in January for the first time in four months," it says in its announcement, "monthly volume remained $11 billion–or more than 16%–below pre-coronavirus levels. January's sales gain was a step in the right direction, but the industry's road to recovery remains long."

Higher-end restaurants are most pessimistic, with 71% saying it will be at least seven months before business conditions return to normal for their restaurant. Among  QSR and fast-casual operators, only 30% believe it could happen within the next six months.

But while fallout continues, industry experts already see how some chains are putting themselves in a position to gain from closures and a shifting real estate market.

"Unit closures should allow for market share gains for the restaurants that survive the pandemic," writes David Tarantino, an analyst with Baird. "And better real estate availability would provide an opportunity for well-capitalized, growth-oriented chains to accelerate growth."

Baird's latest study of privately held restaurants finds that QSR is holding up best, closing only 0.5% of total units last year. And respondents don't anticipate closing any in 2021, "likely reflecting the outperformance seen for this segment." 

Although industrywide fast-casual sales have dropped 29%, Tarantino writes that the fast-casual respondents have held up relatively well and only expect to shutter 1% of the total unit base. Planned closures are concentrated within malls/retail shopping centers.

Steak 'n Shake is suing Fortress Investment Group, saying it tried to force it into Chapter 11, reports Bloomberg.

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