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Why Dave & Buster's, Cheesecake Factory, and Brinker International Were Falling Today

By Rich Duprey – Jun 26, 2020 at 4:27PM

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Investors seem to have lost their appetite for restaurant stocks.

Shares of most restaurant stocks were falling hard on Friday as fear over a surge in coronavirus cases caused Texas to reverse its policies on reopening its economy. One day after it had paused the process, it said it was closing the state down again.

Dave & Buster's Entertainment (PLAY -1.40%) was among the worst hit restaurants, with shares falling 12%, but Cheesecake Factory (CAKE -2.33%) was down 9%, and Brinker International (EAT -2.54%), the owner of Chili's and Maggiano's Little Italy, was falling 4%.

Group of friends being served by a waiter.

Image source: Getty Images.

The adult food and entertainment chain Dave & Buster's is bearing the brunt of investor worry because, unlike many other restaurants, it doesn't have a takeout or delivery option available; its experience is built on customers being in the restaurant. 

CEC Entertainment, the parent of Chuck E. Cheese, is positioned similarly to Dave & Buster's but with a focus on kid-oriented food and entertainment, and it just declared bankruptcy yesterday. Investors are undoubtedly worried what a new round of shutdown orders would do to Dave & Buster's.

While Cheesecake Factory does have a to-go business to fall back on, it has been looking forward to reopening its restaurants. It reported earlier this month 25% of its restaurants were reopened, and it had already recaptured 75% of their pre-pandemic sales.

So, too, with Brinker's family of restaurants, which recently told investors 82% of its restaurants were open again, and it was seeing steady improvement in comparable sales.

 

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool recommends Dave & Buster's Entertainment. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Dave & Buster's Entertainment, Inc. Stock Quote
Dave & Buster's Entertainment, Inc.
PLAY
$31.03 (-1.40%) $0.44
Brinker International, Inc. Stock Quote
Brinker International, Inc.
EAT
$24.98 (-2.54%) $0.65
The Cheesecake Factory Incorporated Stock Quote
The Cheesecake Factory Incorporated
CAKE
$29.28 (-2.33%) $0.70

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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