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Restaurants get a second wind after hurricanes

Restaurants get a second wind after hurricanes

Blog: Sales plunged during hurricanes Harvey and Irma, but then they came roaring back

This post is part of the On the Margin blog.

Hurricanes Harvey and Irma devastated restaurant sales in Houston and Florida in August and September.

But sales quickly rebounded in the weeks afterwards, increasing faster than the rest of the country, according to data from Earnest Research, a New York-based company that compiles anonymous spending data from 4 million customers. In this instance, the company studied transaction data from a panel of 1 million anonymous consumers.

The firm analyzed sales in the week before the storms, the week of the storms, and then the weeks afterward.

During Harvey, which devastated Houston in late August, restaurant sales in that area fell more than 40 percent during the week the storm made landfall. By comparison, restaurant sales that week increased 2.2 percent everywhere else.

They fell 8.3 percent the week after the storm hit, while sales elsewhere were roughly flat.

But sales began picking up afterwards. Two weeks after Harvey, sales in the Houston area increased 6.6 percent while sales everywhere else were flat. And restaurant sales in Houston outpaced sales elsewhere in subsequent weeks, too.

The rebound was even more pronounced in Florida. 

Irma struck that state in September, and restaurant sales fell 30.1 percent the week of the storm and 3.1 percent the week after. Sales everywhere else increased modestly both weeks.

Two weeks after Irma sales increased 4.8 percent, however, while they increased 1.5 percent everywhere else. Four weeks after the storm hit restaurant sales increased 12.3 percent in Florida, while they increased 1.6 percent the rest of the country. 

The figures demonstrate clearly that restaurant sales rebound quickly after a hurricane, even if they don’t regain everything that was lost during the storm. Construction workers and insurance adjusters and others rush into areas. And those people need to eat.

In the aftermath of both storms, restaurants hurried to reopen, and many gave away meals to first responders and to others affected.

Executives with Outback Steakhouse owner Bloomin’ Brands Inc. talked on the company’s most recent earnings call that many chains have seen a “rebound” in October, following the storms. 

Earnest Research looked at individual chains, finding that Panera Bread sales plunged more than 55 percent the week of Harvey and then 7.3 percent the week after, but sales in subsequent weeks increased as much as 15 percent.

Burger King, McDonald’s, Olive Garden and Wingstop all saw steep declines during the hurricane and then big rebounds afterward. During Harvey, McDonald’s sales fell 14.7 percent, compared with an increase of 5.5 percent elsewhere.

In subsequent weeks, McDonald’s sales in Houston increased between 7.4 percent and 10.8 percent, according to Earnest Research.

McDonald’s sales fell 7 percent the week of Irma and 10 percent the week after. The chain’s sales increased as much as 18 percent in subsequent weeks.

Both McDonald’s and Burger King were beneficiaries of a pre-Irma bounce, too. Burger King’s sales increased 16 percent the week before the storm while they increased 9 percent in the rest of the country. 

McDonald’s sales increased 12 percent in Florida the week before Irma. They increased 2 percent that week everywhere else. 

Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

TAGS: Finance
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