Big Divide In The Restaurant Industry

Authored by Mike Shedlock via MishTalk,

Independent restaurants skid towards bankruptcy as large chains recover.

Who’s Booming, Who’s Not?

• Well-capitalized large chains like McDonald’s, Chipotle and Domino’s are booming 

• Your neighborhood independent restaurant isn’t

The Covid crisis created a Big Divide in the Restaurant Industry

The coronavirus pandemic is splitting the restaurant industry in two. Big, well capitalized chains like Chipotle Mexican Grill Inc. and Domino’s Pizza Inc. are gaining customers and adding stores while tens of thousands of local eateries go bust.

Larger operators generally have the advantages of more capital, more leverage on lease terms, more physical space, more geographic flexibility and prior expertise with drive-throughs, carryout and delivery.

A similarly uneven recovery is unfolding across the business world as big firms have tended to fare far better during the pandemic than small rivals. In the retail world, bigger chains like Walmart Inc. and Target Corp. are posting strong sales while many small shops struggle to stay open.

Chain Reaction

Smaller chains and independents often use local farms for supplies including organic foods. 

As independents struggle so does the local specialty farm.

The big chains can get a break or extension from creditors. 

Good luck to the locals once Pandemic relief expires (and that happened at the beginning of September).