If there were any “black cloud” questions being asked of the Restaurant management teams in NYC last week, the issues stemming for the oil spill were front and center but future consequences are impossible to predict.
The magnitude of the spill is staggering and the images of oil flowing into the gulf are painful to watch. With some oil already being found in the Florida panhandle, the odds appear high that the oil slick will feed into the Gulf Stream, likely carrying the oil through the Florida Keys, past Miami and up the east coast. The Gulf Stream travels at an average speed of 4 miles per hour, so once the oil hits the Gulf Stream, it will take 26 days to hit the Hamptons.
As the events unfold, tourism will suffer in the state of Florida and in other parts of the east coast. Looking past the summer, many snow birds will likely look for a new place to rest for the winter. This is a worrying scenario for the Sunshine State’s economy.
Longer term, another concern would be the potential impact of a slowdown in drilling, particularly in Texas, which is an important state for a number of restaurant companies.
The following table shows the casual dining industry exposure to different regions of the country, based on the Malcolm Knapp data. The chart shows the regions of the country that are performing better or worse than the national average for the month of March.
The two chains that stand out the most to exposure to Florida and Texas are EAT and PFCB, but CAKE RUTH, DRI and TXRH have significant operations too.