As the coronavirus claims more lives in the United States than any other country in the world, the latter is also dealing with huge economic strains at the hands of the pandemic getting upended due to social distancing measures. Trade groups estimate 30% of the total restaurants chains could permanently close due to the pandemic. While independent restaurants are more at risk, dining room closures and consumers eating more at homes have also strained restaurants chains aiming at more economic strains in the casual dining sector.
A report from S&P Global Ratings that was released on Friday point out that 15 publicly traded restaurant chains are more likely to close by default. Starbucks, Denny’s and Yum Brands made the latter lost with a much smaller probability of default recorded in a single year. All the following brands named came under less than 10% of total profitability during the second quarter.
Pizza Hut’s largest U.S Franchise filed for Chapter 11 on July 1st after struggling with their debt-ridden business. Taco Bell received millions in PPP loans to stay afloat. Chuck E. Cheese’s parent company filed for Chapter 11 bankruptcy in late June. The chain showed $1.91 billion in liabilities on their balance sheet as of Dec. 29. The company plans to operate as it undergoes the bankruptcy process.
In late April, the German restaurant chain Vapiano applied to start insolvency proceedings in Cologne. The company publicly trades on the Frankfurt Stock Exchange and has six U.S locations scattered all throughout the country. Vapiano went public in 2017 with a market value of 553 million euros, or $630,000.
The parent company of buffet-style restaurants Souplantation and Sweet Tomatoes filed for Chapter 7 bankruptcy in May and closed all of their locations permanently. Garden Fresh has an estimated costs of $50 to $100 million in liabilities according to their bankruptcy filings. The company also liquidated their assets in the following month.