What happened
Dunkin' Brands (DNKN) shareholders underperformed a weak market last month. Their stock fell 20% compared to a 12.5% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.
The slump left shares down over 33% so far in 2020, compared to a 22% drop in broader indexes.
Image source: Getty Images.
So what
The coffee and snack giant joined most restaurant industry peers in falling last month as COVID-19 forced dramatically lower customer traffic at restaurants and fast-food chains.
Dunkin' switched to carry-out and delivery service on March 17, for example, to comply with government efforts to slow the spread of the virus. Investors are worried about the loss of short-term revenue and the uncertainty around when Dunkin' will be able to reopen its full dining services.
Now what
Dunkin' reported cash holdings of over $700 million as of Dec. 28, which should help it navigate through any short-term disruption in sales. Yet it appears that aggressive social distancing efforts will last at least six weeks and produce a significant drag on its early 2020 revenue and profit trends.
