
Casual dining chains like IHOP and Olive Garden are at risk
New York (CNN Business)Restaurants are taking an astounding hit because of efforts to contain the spread of the coronavirus pandemic. Many are limiting seating. Some are shutting their doors altogether. Darden Restaurants -- which owns Olive Garden, LongHorn Steakhouse and other casual dining chains -- shared bleak news when it reported financial results Thursday.
In the first half of last week, sales at some restaurants open at least 16 months fell as much as 60% compared to the same period in 2019. The company pulled its full-year guidance and told shareholders it was suspending its quarterly dividend. Darden is hardly alone. Independent operators have warned the closures could put them out of business for good, and massive companies are also scrambling to adjust.
Starbucks (SBUX) has temporarily closed its cafes in the United States and Canada. In the United Kingdom and Ireland, McDonald's (MCD) is closing stores, including for takeout. Major casual dining chains, like Olive Garden, IHOP and Chili's, are better equipped to weather the storm than mom-and-pop chains or independent fine-dining restaurants. Despite their size, however, the chains are still in a precarious position.

Most casual dining chains don't have drive-thrus. They market themselves as spots for families or friends to visit together, to socialize in person and t be waited on by staff. That business model is now a liability. These days, those chains have to quickly figure out ways to ramp up off-premise orders while keeping their companies afloat.
"Most of the bigger players will find a way to survive," said R. J. Hottovy, a consumer strategist for Morningstar. But "it's not going to be easy.
" A clear disadvantage Casual dining is "all about the experience," said Hottovy. So restrictions on dining rooms are "a major shock to the system. " Nick Setyan, a restaurant analyst for Wedbush Securities, said that "clearly, the casual diners are disadvantaged," when compared to fast casual and fast food chains, which have been investing in takeout, delivery and their drive-thru services.
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