Investors hit restaurant stocks hard on Monday as Wall Street worried about the potential impact of a new round of coronavirus cases.
The S&P 500 fell 1.6% on Monday while the Dow Jones Industrial Average fell more than 700 points after being down almost 1,000 points at one point.
Restaurant stocks were particularly hard hit. Nearly all restaurant stocks fell on Monday. Only Papa John’s and the small cap Rave Restaurant Group gained value outside of two companies being sold (J. Alexander’s and Luby’s Restaurant Group).
Casual dining names were hit particularly hard. Red Robin fell 11% to just under $24 per share. Most other companies weren’t walloped as hard. But Dine Brands Global fell 8% while Bloomin’ Brands and Dave & Buster’s both fell 7% while Ruth’s Chris, Brinker International and Cheesecake Factory each fell 6%. Several other companies fell 5%, including Darden, BJ’s Restaurants and Texas Roadhouse.
Limited-service companies were not hit as hard, outside of the Chicago-based sub concept Potbelly, which fell 12%. Most fast food and fast-casual companies declined between 1% and 3% on Monday.
The differences likely suggest that investors are worried about the potential impact more coronavirus cases could have on dine-in use.
The rate of coronavirus infections has tripled since late June, due largely to the rapid spread of the more infectious Delta variant of the virus. The 7-day moving average of coronavirus cases topped 26,000 on Sunday, according to the U.S. Centers for Disease Control and Prevention. That was the highest number since May.
Hospitalizations have increased and deaths from the disease have also started rising. The number of cases has soared throughout the country but case rates and hospitalizations are worse in places where vaccination rates are lagging, including Missouri, Arkansas, Florida and Louisiana.
Yet thus far there seem to be few efforts to limit dine-in service like last spring. But Los Angeles County did reinstitute mask requirements last week.