What happened

Restaurant stocks suffered in March, according to data from S&P Global Market Intelligence, but some food service brands fared better than others. Burger giant McDonald's (NYSE:MCD) fell 14.8% last month, roughly in line with the stock market at large. At the same time, craft-beer restaurant chain BJ's Restaurants (NASDAQ:BJRI) saw its shares drop 57.9% lower, and Outback Steakhouse parent Bloomin' Brands (NASDAQ:BLMN) took a 60.3% haircut.

So what

The COVID-19 crisis seemed like a distant threat at the start of March, largely confined to a single city in China. That public perception changed quickly as the coronavirus was found on every continent and started to affect daily life around the globe. Sit-down restaurants like BJ's and Outback saw their foot traffic drop and then grind to a halt under various types of stay-at-home orders from local government officials. By the middle of the month, most restaurants nationwide had closed their dining locations and refocused on takeout and delivery options.

That transition wasn't terribly difficult for McDonald's, where the trademark filing for the company name has described it as "Drive-in Restaurant Services" since 1961. The company was already trying to expand its delivery services anyway, so the coronavirus only accelerated McDonald's chosen business trajectory. In that light, it's no surprise to see the Golden Arches tracking closely to the S&P 500 in March.

BJ's and Outback, on the other hand, weren't prepared for this dramatic shift in their food service operations. Sure, you could order takeout from both restaurants if you wanted to, but their success was always closely tied to the restaurant locations.

Outback Steakhouse evokes an Aussie charm that you just don't get from opening a couple of Styrofoam boxes at your own dining table. Sister chain Carrabba's Italian Grill makes a show out of the freshly baked Italian bread to be dipped in herb-infused olive oil. That's all part of the show.

And BJ's runs microbreweries in some of its locations, making every effort to suggest craft beers to pair with every entree on the menu. All of these advantages go away when restaurants are limited to takeout and delivery.

A man in a black t-shirt carries two Styrofoam takeout boxes.

Are we getting used to takeout and delivery services yet? Image source: Getty Images.

Now what

Restaurant chains designed from the ground up around physical dining rooms where people can sit and enjoy each chain's unique ambiance will continue to suffer as long as the coronavirus lockdowns are in effect. Fast-food specialists with busy drive-thru windows should do better in this difficult period.

These companies are bracing for a serious business impact. Bloomin' Brands has paused its dividend payouts and drawn down all of its available revolving credit facilities. The company also stopped sending paychecks to CEO David Deno and the board of directors. BJ's is deferring its dividend payments until further notice and also followed Bloomin's example in drawing down its entire revolving credit facility. The company now has roughly $95 million of cash on hand and would expect to burn $5 million per week in a worst-case scenario where all of its restaurants are completely closed.

Some restaurant chains will undoubtedly perish when the coronavirus crisis has run its course, while others have enough financial stability to survive even a lengthy shutdown. Both Bloomin' Brands and BJ's should be able to make it through this dark period, assuming that the virus situation isn't keeping Americans at home throughout the summer. Their stocks may still fall even further as investors react to short-term developments rather than focusing on each company's long-term prospects.

Meanwhile, established fast-food blue chips like McDonald's should just keep on trucking. They are providing delivery and carry-out services from a position of strength, and don't forget that low-cost meals serve an important function when millions of Americans are tightening their belts under unemployment assistance.