Coronavirus left these restaurant chains most likely to default on loans: report
The restaurant chains least likely to default include Chipotle, McDonald’s and Wingstop
The restaurant industry has been hit hard by the coronavirus pandemic and a new report has found which publicly traded restaurant companies are among the most affected.
On Monday, S&P Global Market Intelligence published a report that found overall, the largest publicly traded restaurant companies are less likely to default on their debts than they were in April as they have been allowed to reopen. However, there is still plenty of uncertainty.
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The S&P report found the probability for U.S. restaurants to default in April was 35 percent, but that number fell to 10 percent in July. Last week, the probability of default for restaurants overall increased again, but only to 12 percent.
Outback Steakhouse's parent company Bloomin' Brands Inc. is among the companies most likely to default because of the pandemic, according to a recent analysis. (Photographer: Victor J. Blue/Bloomberg via Getty Images)
Some restaurant companies have higher probabilities than others.
Dave & Buster’s Entertainment Inc., Bloomin’ Brands Inc. -- the parent company of Outback Steakhouse -- and Denny’s Corp. are among the largest publicly traded companies that are the most likely to default, according to the report.
Meanwhile, Chipotle Mexican Grill Inc., McDonald’s Corp. and Wingstop Inc. were the publicly traded restaurant companies that were least likely to default.
A Bloomin’ Brands spokesperson told FOX Business in an email that the S&P report “mischaracterizes our strong financial health and recent sales performance,” citing $500 million in liquid assets and “solid sales with positive cash flow.”
A spokesperson for Denny’s also told FOX Business that the company is “optimistic about the strength” of its brand.
“We are confident in our strategy, the overall improvement in both industry and brand results, and the strength of our balance sheet,” the Denny's spokesperson said in an emailed statement. “Moving forward we firmly trust in our brand’s ability to weather this storm.”
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Companies that default on their loans could be forced to shut down some locations, file for bankruptcy protection or liquidate, according to a report from USA Today.
Last month, California Pizza Kitchen filed for Chapter 11 bankruptcy protection because of the coronavirus pandemic.
In its agreement, the chain said it would close unprofitable locations, reduce its long-term debt load and emerge from bankruptcy “as a much stronger company,” FOX Business reported at the time.
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To see which chains are still among the hardest-hit by the coronavirus pandemic, here are the largest publicly traded restaurant companies that are most likely to default on their loans in the next year, according to S&P Global Market Intelligence.
Dave & Buster’s Entertainment Inc.
Restaurant: Dave & Buster’s
Probability of default: 16.1 percent
Bloomin’ Brands Inc.
Restaurants: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s, Aussie Grill
Probability of default: 13.2 percent
Denny’s Corp.
Restaurants: Denny’s
Probability of default: 11.9 percent
The Cheesecake Factory Inc.
Restaurants: The Cheesecake Factory
Probability of default: 11.7 percent
Dine Brands Global Inc.
Restaurants: Applebee’s, IHOP
Probability of default: 11.3 percent
BJ’s Restaurants Inc.
Restaurants: BJ’s Restaurant & Brewery, BJ’s Restaurant & Brewhouse, BJ’s Pizza & Grill
Probability of default: 9.3 percent
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PLAY | DAVE & BUSTER'S ENTERTAINMENT INC. | 34.05 | -0.05 | -0.15% |
| BLMN | BLOOMIN' BRANDS INC. | 13.19 | +0.40 | +3.13% |
| DENN | DENNY'S CORP. | 6.25 | -0.14 | -2.19% |
| CAKE | CHEESECAKE FACTORY INC. | 46.56 | +0.22 | +0.47% |
| DIN | DINE BRANDS GLOBAL INC. | 32.96 | +0.23 | +0.70% |
| BJRI | BJ'S RESTAURANTS INC. | 35.34 | +0.82 | +2.38% |
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A previous version of this article was updated to include statements from Bloomin’ Brands and Denny’s.