It is a topic that divides our nation, our states, our cities and our towns. How much should restaurants shut down amidst the pandemic? Maybe to 50% capacity? 10%? Maybe until the pandemic is over? And what have the impacts been so far in 2020?
In mid-November, the National Restaurant Association Research Group conducted a survey of thousands of restaurant operators in order to assess the economic impact of the COVID-19 pandemic.
Here are some of the key findings.
Current Restaurant Business Conditions For the month of October, restaurant operators reported sales declines in both the full-service and limited-service segments in October. That is probably not surprising to anyone.
In total, sales were down 29% from the prior year and almost 80% of all restaurant operators say their total dollar sales volume was down in October from a year ago. Again, likely not surprising.
But a whopping 83% of full-service operators and 67% of limited-service operators expect their sales to decrease from current levels during the next 3 months. And as the weather turns colder, expectations will deteriorate further, as the end of the outdoor dining season hits more parts of the country.
As such, a staggering 36% of operators said they are considering simply closing until the pandemic passes.
Current Restaurant Job Conditions Although many restaurants have brought back employees after the lockdowns from earlier in the year, overall staffing levels are still way below normal.
The National Restaurant Association estimates that as of December 1st, there are at least 110,000 eating and drinking places closed permanently. That’s 17% of the industry.
Here are the more sobering statistics: on average, permanently closed restaurants had been in business for 16 years and employed an average of 32 people. And about 1 in 5 had been in business for over 30 years and employed over 50 people.
Can you reconcile these statistics with the 85% appreciation of DoorDash on its first day of trading?
It will be debated from Wall Street to Main Street and everybody will have an opinion. Is DoorDash the next Facebook, Twitter or Google? Or the next Pets.com? What’s it really worth? Is this the beginning of the next Dot.com bubble?
On Wednesday, December 9th, shares of DoorDash, a food delivery app, started trading on the New York Stock Exchange under the ticker symbol “DASH.” On Tuesday night, prospective DASH investors saw each share priced at $102. By the next morning, the stock was trading at $182/share and it ended the day at about $188. What a ride.
Wall Street was particularly keen on the DoorDash IPO because it kicks off a very busy IPO season, with Airbnb set to debut on December 10th and Wish expected to debut before the end of the year.
Here is something to consider, knowing those two revenue numbers:
So, what investors need to keep in mind is that an investment in the DASH is really an investment in a company that most recently lost almost $150 million in 9 months (let’s call it $200 million in a year).
Is the DASH a good investment? That’s a tough one to answer and only time will tell. In the meantime, if you’re thinking of investing in the DASH, make sure you understand the business model. And the numbers.