You knew this was coming, but now it's actually come -- and now we see the effect.
Over the weekend, state governments began demanding that restaurants and bars close their doors in response to federal government exhortations toward "self-quarantining" and "social distancing" to slow the spread of coronavirus.
At last report, 14 states -- roughly one out of every four in the Union -- have announced restaurant and/or bar closures. As of 3 p.m. EDT Monday, shares of Brinker International (NYSE:EAT), Wendy's (NASDAQ:WEN), and Shake Shack (NYSE:SHAK) are down 37.5%, 20.2%, and 11.9% respectively.
And not only restaurant stocks have been hit. Beyond Meat (NASDAQ:BYND) is down 12.3% as well -- illustrating how the company's wide-ranging efforts to get its products onto restaurant menus are turning into a double-edged sword.
Things could still get worse. In fact, things almost certainly will.
So far, Connecticut, the District of Columbia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Washington state have all ordered bars and restaurants within their borders to close to the public, and prepare food only for takeout and delivery. California, however, is closing only bars, nightclubs, breweries, and wineries. For the time being, restaurants are only being asked to reduce their occupancy by 50%.
That right there is a second shoe just waiting to drop. And after it does, there are still 36 more states that haven't announced any closures yet, but probably will. While there's certainly a possibility that the government will figure this out, and step in with yet another announcement of targeted relief measures -- a restaurant industry bailout -- there's no guarantee that this will happen or, if it does, how long it will take.
In the meantime, restaurant stocks are falling. You knew this was coming -- and now it has come.