Big restaurant chains could see sales rebound this week

[July 27, 2020]  By Hilary Russ

NEW YORK (Reuters) - McDonald's Corp <MCD.N>, Starbucks Corp <SBUX.O>, Yum Brands Inc <YUM.N> and other big restaurant chains could show improving sales, based on early results from rivals such as Chipotle Mexican Grill Inc <CMG.N> that improved despite dining rooms shuttered for months.

Large brands have been able to shift quickly to simplified menus, mobile ordering, pick-up, drive-thru and delivery to get food to customers quickly and with less face-to-face contact.

Chipotle Mexican Grill Inc <CMG.N> sales have risen 6.4% so far in July, the company reported on Wednesday.

After surveying McDonald's franchisees, Kalinowski Equity Research last week raised its projection for comparable McDonald's sales for the current quarter to 2.4% from flat.

Restaurants and bar receipts started 2020 at a record $65.55 billion in January, plunged to $30 billion in April - the lowest since December 2003 - and came back to $47.425 billion in June, according to the Commerce Department's monthly retail sales report.

Soaring coronavirus cases in Florida and Texas - where Bloomin' Brands Inc <BLMN.O> has 286 company-owned locations - have not dampened sales there despite restrictions on how many people can dine in at once, the company said on Friday.

Bloomin Chief Executive Officer David Deno told Reuters that "people want to go out... and you're seeing that in our trends."

Dunkin' Brands Group Inc <DNKN.O>, Cheesecake Factory Inc <CAKE.O> and Shake Shack Inc <SHAK.N> also report financial results this week.

A sign is seen at a McDonald's restaurant in Queens, New York, U.S., March 17, 2020. REUTERS/Andrew Kelly/File Photo

To be sure, with coronavirus cases hitting record highs, better sales are far from confirmed.

Total transactions at major U.S. restaurant chains fell by 14% in the week ended July 12 versus a year ago – compared to a smaller 11% drop the prior week, according to data analytics firm The NPD Group Inc.

Separately, U.S. dining food and supply orders in the United States had been recovering but dropped 15.4% during the week ending July 11 from the week before, as tracked by Buyers Edge Platform, a restaurant group purchasing organization and supply chain company.

Changes to enhanced unemployment insurance could also dampen consumer spending at some restaurants. Congress expected to consider legislation next week that may extend the benefits.

Nonetheless, Del Taco Restaurants Inc <TACO.O> sales improved during the first five weeks of the current quarter, it reported on Thursday.

"Absent a major setback from the pandemic, we believe that the worst of it may be behind us," Chief Executive Officer John Cappasola said.

(Reporting by Hilary Russ in New York; additional reporting by Dan Burns)

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