Shares of Bloomin' Brands (BLMN 1.93%) popped on Friday after the company provided a business update answering investors' questions regarding the ongoing impact of COVID-19. Shareholders hoping for good news are no doubt happy to hear that 92% of the company's restaurants have reopened dining rooms in some capacity.
Bloomin' Brands stock finished 7% higher for the day but still have a long way to go to fully recover. Shares are still down almost 50% in 2020.
Bloomin' Brands primarily generates revenue from dine-in restaurant sales. Dining rooms were closed around the country, so no one was surprised to see a 43% drop in second-quarter revenue. Overall, this revenue was better than at the height of the coronavirus shutdown when sales were down more than 50%. And it was ahead of analyst expectations.
Obviously, this big drop in sales led to a huge net loss. Bloomin' Brands lost $92 million in Q2. Part of this loss was the result of the company's decision to not furlough any workers -- a rare decision for a company facing a steep drop in revenue. Faced with ongoing losses, the company has about $500 million in liquidity to work with.
As restaurants reopen, Bloomin' Brands has the opportunity to move fast to recover sales since it kept its workforce. And sales did appear to be recovering nicely, initially. For restaurants with dine-in seating available, comparable sales were up 2% for the week ending June 21. However, that week got a boost from Father's Day. Since then, overall comp sales have been down by double digits.
These restaurants have limited seating, so on one hand it's not fair to compare sales with last year. However, Bloomin' Brands shareholders need to at least consider the possibility of changing consumer behavior. Chipotle Mexican Grill CEO Brian Niccol says that most of its customers are still taking their food to go, despite most dining rooms being open. Is this the new normal?
Until the coronavirus passes and investors have clarity for the long-term impact on consumer behavior, it might be better to look for a safer stock for your portfolio.