Just a week after Hurricane Harvey hammered Texas and Louisiana, Hurricane Irma is set to make landfall in Florida, and that could be bad news for the restaurant industry.
The storm, a Category 5, is expected to strengthen and hit the Sunshine State this weekend, and restaurant stocks are already dropping in anticipation of damage.
Restaurants that have a significant number of locations in the area stand to see sales shrink in the third and fourth quarter as deadly winds, storm surges and flooding cause closures and displacement of workers.
On Tuesday, Canaccord analyst Lynne Collier identified the restaurants she covers that are most at risk for sales losses due to destruction by Irma: Fiesta Restaurant Group, which owns Taco Cabana; Ruth's Hospitality Group, which operates Ruth's Chris Steak House; Outback Steakhouse owner Bloomin' Brands and BJ's Restaurants.
Collier noted that Fiesta Restaurant Group is the most at-risk restaurant in the area, as about 37 percent of its restaurants are located in Florida. Ruth's Hospitality Group has about 21 percent of its locations there and about 19 percent of Bloomin' Brands restaurants are expected to be in the range of the storm.
In Tuesday trading, shares of Fiesta Restaurant Group were down 5.2 percent. Ruth's Hospitality and Bloomin' Brands shares both dropped less than 1 percent, while BJ's Restaurants shares slipped 3 percent.
As is true with Hurricane Harvey, the majority of relief efforts will be geared toward rebuilding homes, not businesses. So, restaurant owners who are unable to finance the restoration of their location may be forced to stay closed longer or shutter their business altogether.