Hurricane Harvey's heavy rainfall and record flooding pummeled restaurant sales last week in Texas, and Hurricane Irma's wrath isn't too far behind.
Irma, which is slated to make landfall in Florida and then move up the East Coast through Georgia, South Carolina and North Carolina, is bad news for restaurants clustered in that area.
On Friday Canaccord analyst Lynne Collier updated the list of restaurants she covers that she sees as the most at risk for sales losses due to destruction by Irma. She foresees Bojangles; Fiesta Restaurant Group, which owns Taco Cabana; Zoe's Kitchen; Outback Steakhouse owner Bloomin' Brands, and Ruby Tuesday, as the most likely to take a hit from the storm.
Bojangles, in particular, could see sales and traffic plunge in Irma's wake. Collier said about 83 percent of the brand's restaurants are in the areas expected to be hit by the hurricane.
About 42 percent of Fiesta Restaurant Group's locations and about 32 percent of Bloomin' Brands' locations are in the range of the storm.
Restaurants that have a significant number of locations in Irma's path stand to see sales shrink in the third and fourth quarter as deadly winds, storm surges and flooding cause closures and displacement of workers.
These effects could be felt for months after the storm dissipates, as the majority of relief efforts will be geared toward rebuilding homes, not businesses.
Collier said she also expects September same-store sales for casual dining restaurants, in particular, to be down between 2 and 4 percent.
"We remain cautious and believe stocks will be remain under pressure in the near term until we gain greater visibility around the impact of Hurricane Irma," Collier wrote. "Looking beyond these near term headwinds, many restaurants are trading at valuation levels not seen since the recession, and we believe the negative sentiment towards casual dining is virtually unprecedented."