Sales and profits of restaurant chains with locations in the Houston area will likely only be minimally affected by Hurricane Ike, a KeyBanc Capital Markets analyst said Wednesday.
Analyst Lynne Collier said in a note to investors that most restaurant companies with a large presence in the Houston area have reported "very little major damage" to restaurants from the storm, which hit the Texas coast last weekend as a Category 2 hurricane.
Collier said she spoke with restaurant managers and senior executives and that most restaurants were or will be back "on-line" within three to seven days.
"The primary issue right now at the restaurant-level is the lack of safe water to use and the lack of electricity," she said. The storm shut off electricity for millions in the state and throughout the Gulf Coast region. Officials are now working to restore power.
The companies most affected by the storm, she said, were Sonic Corp., Kona Grill Inc., P.F. Chang's China Bistro Inc., BJ's Restaurants Inc. and Brinker International Inc., which operates the Chili's Grill & Bar chain.
Collier said Sonic has about 150 restaurants in the Houston area. She said if the restaurants are closed for five to seven days, fiscal first quarter same-store sales could fall by about 0.7 to 0.8 percentage points.
But, she said, evacuees leaving Houston may visit other Sonic locations nearby, reducing the overall impact of the store closures.
Same-store sales, or sales at locations open at least a year, are a key indicator of restaurant performance since they measures growth at existing locations rather than newly opened ones.
The other chains _ which have fewer locations in the area than Sonic _ may also see a hit to their same-store sales in the current quarter of between 0.1 and 0.5 percentage points, she said.
Collier also noted that Brinker's management indicated that the profit impact from Ike would be "fairly minimal." Brinker has about 46 restaurants in the area.
Shares of Brinker fell 39 cents to $17.81 in afternoon trading while Sonic shares dropped 74 cents, or 5 percent, to $13.99.
P.F. Chang's shares dipped 6 cents to $24.44 and Kona shares fell 24 cents, or 4.1 percent, to $5.56.
B.J.'s shares slipped 20 cents to $12.25.
Terms & Conditions
RSS Headlines
Fool UK