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Hurricane Irene’s potential effects on restaurants in its path

East Coast restaurants from Florida to Maine brace for storm’s impact

As Hurricane Irene threatens to unleash powerful winds and rain in a 10-state swath from the North Carolina coast to New England this weekend, analysts are already projecting the storm’s impact on restaurant companies most at risk with a large number of units in the storm’s path.

Through the weekend, the storm is expected to result in canceled airline flights, the shut-down of public transportation systems, and traffic jams as residents evacuate flood-prone coastal and low-lying areas.

Sharon Zackfia of William Blair said in a report Friday that casual-dining chains, such as The Cheesecake Factory and P.F. Chang’s China Bistro, are most likely to see sales dip due to the storm, while fast-casual and quick-service chains, such as Panera Bread and Chipotle Mexican Grill, may benefit, based on previous experience.

Zackfia estimates that The Cheesecake Factory has more than 20 percent of its locations in the affected areas, which will likely negatively alter her third-quarter same-store sales projections for the Calabasas Hills, Calif.-based chain by 2.5 percent to 3 percent.

Cheesecake Factory officials were not available at press time.

P.F. Chang’s, with an estimated 15 percent of its Bistro units and 10 percent of Pei Wei locations in the storm’s path, will likely see more modest effects, Zackfia said.

On the other hand, Zackfia said Panera Bread and Chipotle, both of which have about 20 percent of their respective units in the affected area, will likely benefit, as evacuees have been more likely to grab a quick meal during previous storms.

Irene Cook, Panera vice president of retail operations for the Eastern region, said in an email that coastal units have been doing everything they can to remain open, provided conditions remain safe.

“We are busy trying to arrange for refrigerated trucks where needed, that our fresh dough is being delivered as expected, and that our associates who live closer to our bakery-cafes are on stand-by if called upon,” she said. “As in the case of the many storms that our communities have endured, Panera always tries to do our best to have the hot food, welcoming environment, electrical power and means to connect to the Internet — and with neighbors — available when the community needs us most.”

Starbucks, which Zackfia estimates has about 20 percent of its company-operated domestic units in affected states, isn’t likely to see as much impact because weekends are typically less busy, regardless of weather.

“In sum, we see the potential for Hurricane Irene to modestly dampen our third-quarter sales estimates for both The Cheesecake Factory and P.F. Chang’s, while potentially modestly benefitting sales at Panera Bread and Chipotle,” Zackfia wrote.

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Also in a report Friday, analyst Jeffrey Bernstein of Barclays Capital ranked the restaurant chains he covers in terms of their storm exposure risk.

“While difficult to assess the potential/ultimate damage from such a storm, we have historically seen traffic impacted from the threat of and/or unfavorable weather from storms,” he wrote.

Bernstein found Ruby Tuesday to be the chain most at risk, with 37 percent of units in the 10 states the storm is expected to hit.

Greg Ashley, a spokesman for Maryville, Tenn.-based Ruby Tuesday, said that estimate sounded high.

The company is preparing its restaurants for the storm’s impact, just as other businesses and home-owners are, he said.

“At the end of the day, we don’t really know which direction it will go,” he said. “We’re planning, but not overly panicking.”

Bernstein also named Panera Bread and The Cheesecake Factory as having high exposure, as well as Outback Steakhouse and Domino’s Pizza — both of which have 25 percent of locations in the storm’s path, by his estimate.

Tim McIntyre, Domino’s vice president of corporate communications, said Friday that about six of the pizza chain’s coastal locations were closed for the weekend because of forced evacuations.

Elsewhere, stores have been preparing for the storm this week, ordering additional food and putting generators in place where available, he said.

Additional trucks have been sent to the chain’s Connecticut supply center in the event additional deliveries are necessary.

Bad weather can benefit Domino’s when customers decide to stay in and order pizza instead of going out, McIntyre said. Domino’s philosophy during natural disasters is to “be the last one closed and the first one open.”

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Many restaurants in coastal resort areas were planning to close to allow staff members to seek higher ground.

In New York, 14 BR Guest Hospitality group restaurants — including the Atlantic Grill, Blue Water Grill and Dos Caminos brands — were planning to close on Saturday. Blue Fin at the W Hotel in Times Square will remain open, said public relations manager Michelle Betrock.

“While we will make every effort to reopen as soon as safely possible, with an effort towards Sunday, no specific times have been set, as we cannot predict the effects of the storm,” she wrote in an email. “The safety of our team members and their families remains our primary concern. We also want to ensure that we are able to provide the appropriate services to our guests that they have come to expect.”

In Atlantic City, N.J., the Borgata Hotel Casino & Spa said Friday the property would close and all customers would be asked to leave by 6 p.m. The hotel was also not accepting reservations for Saturday or Sunday.

The U.S. Open, scheduled to begin its matches in Flushing Meadows, N.Y., on Monday, will also close its facility Saturday afternoon. Levy Restaurants operates concessions at the Billie Jean King Tennis Center.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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