Has Sandy Put a Dent in America’s Appetite?
In a research note composed before hurricane Sandy hit, Miller Tabak analyst Stephen Anderson wrote that fast-food chains Dunkin’ Brands (NASDAQ:DNKN), Chipotle (NYSE:CMG), and McDonald’s (NYSE:MCD) should not see a significant drop in fourth-quarter sales as a result of the storm, as business from evacuation route traffic and clean-up crews will most likely offset the revenue lost from store closures.
“We anticipate the intermediate-term effects of lost sales will be made up at least partially by the following weekend,” wrote Anderson.
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The managing director of Northcoast Research Bob Derrington felt otherwise. In a research note dated October 29, he said the storm was expected “to have a considerable impact on restaurant sales and earnings during calendar fourth quarter.” Northcoast covers several restaurant companies with a significant presence in the Northeast and Mid-Atlantic regions, including the Cheesecake Factory (NASDAQ:CAKE) with 28.2 percent of its locations in the area and Ruby Tuesday (NYSE:RT) with approximately 44.3 percent.
Derrington did make a distinction between casual-dining and quick-service chains. Casual dining restaurants are typically hurt more from hurricanes than fast-food restaurants because more employees are required to operate them and the service is much slower, he said. However, Derrington noted that the full effect of hurricane Sandy will not be known until companies report earnings in January and February.