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How COVID-19 Is Impacting Restaurants

Jayson Derrick

Restaurant stocks were hard hit Thursday with every restaurant name ending the day in the red, even though a small handful of companies came out and said they have seen no impact, according to Restaurant Business.

What Happened

Del Taco Restaurants Inc (NASDAQ: TACO) said in its Wednesday earnings report it has "not observed any impact" on sales, despite a large concentration in hard-hit California. Prior to Del Taco, Starbucks Corporation (NASDAQ: SBUX) CEO Kevin Johnson said it's mostly business as usual in the U.S. and Canada and it has plans to "modify operations'' if need be.

Despite a handful of reassuring comments so far, investors are clearly banking on a downturn for the industry, especially full-service chains. For example, shares of Dine Brands Global Inc (NYSE: DIN) were down more than 30% on Thursday. The lone-standout on Thursday was Texas Roadhouse Inc (NASDAQ: TXRH) as shares lost just 3%.

What's Next

According to a Technomic survey of 1,000 consumers from Feb. 28 to March 2, 31% of respondents said the coronavirus might affect their dining-out habits over the next one to three months, 25% said over the next three to six months, 20% said less than one month, 16% said more than six months while 12% said the coronavirus is likely to have a permanent impact.

No, Food Doesn't Spread Coroanvirus

There is currently zero evidence that food is a source or route of transmission of the coronavirus, the European Food Safety Authority said in a report this week.

The virus appears to be spreading through respiratory droplets when people sneeze, cough, or exhale. This would be consistent with prior outbreaks of related coronaviruses, including SARS and MERS.

The World Health Organization (WHO) is still recommending restaurants and people take extra steps of precaution, such as not serving rare steaks and meats.

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