Impact Of The Coronavirus On American Fast Food Stocks

Coronavirus has hit the world hard financially, but there are a few industries that are feeling more impact than the others. One such industry is the fast-food industry. The new virus is not just affecting the local food joints, but also the U.S. brands, such as McDonald’s, Burger King, Starbucks and others that operate in China. If you have any of these names in your portfolio, it is important for you to know the impact (current and future) of coronavirus on McDonald’s (NYSE:MCD), Starbucks (NASDAQ: SBUX), Burger King and even Yum brands.

Impact of coronavirus on Yum

Coronavirus has forced the restaurants’ owners to close their stores over fears of the spread of the deadly virus. This has led to a sharp fall in their sales. For instance, Yum (YUM) China said last week that its same-store sales dropped by over 40 percent since the Chinese New Year late last month. Yum China operates KFC, Pizza Hut and Taco Bell in the country.

“The recent coronavirus outbreaks have caused significant interruptions to our business,” the company said during its fourth quarter earnings call.

Yum started closing its stores immediately after the Chinese New Year. Currently, over 30 percent of its locations (about 3,000 stores) are closed, while others are seeing fewer footfalls due to travel restrictions and because people are avoiding public gatherings. Yum China operates about 9,200 stores, including over 6,500 KFC locations.

Coronavirus, impact, Yum, McDonalds, Starbucks, Burger King

Yum China also introduced a few preventative measures across the stores and workplaces. One such measure is a contactless in-store pickup service, where customers pick up their food from the racks.

As of now, the extent of the financial impact that coronavirus would have on Yum is not clear. But, considering Yum China reported about $1.8 billion in revenue last quarter, the loss in sales is expected to be significant. Cowen analysts, however, estimate that the recent turn of events would impact the first quarter EPS of Yum Brands by $0.07.

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Alpha Stockman 8 months ago Member's comment

How do you think $BABA will fare?