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Below is a brief excerpt from a complimentary research note written by our Consumer Staples analysts Howard Penney and Daniel Biolsi. If you are an institutional investor interested in accessing our research email sales@hedgeye.com |
Permanent restaurant closures
According to Yelp, since the beginning of March, 23,981 restaurants on its platform shut down entirely at some point during the pandemic. Of those restaurants that closed, 53% have closed permanently.
The permanent closure rate of restaurants exceeds other service sectors, including retail at 35%, beauty salons at 24%, and gyms at 26%. According to the National Restaurant Association, 3% of restaurants have permanently closed, which would be 20,000 restaurants compared to the ~12,000, according to Yelp.
According to Womply, a CRM provider, 20% of local restaurants remain closed as of June 27, as seen in the following chart. The higher number from Womply reflects that its amount is not permanent closures, and its customers are smaller and have less financial resources than chains.
Federal assistance has helped the restaurant industry stay afloat with many operators still in a wait and see mode while others are surviving on take-out and outdoor seating.
Alcohol sales re-accelerate
Total alcohol sales grew 25.4% in the off-premise channel for the week ended June 20, accelerating from 21.2% the previous week.
Beer category sales in off-premise retailers increased 21.2% for the week, up from 20.3% the previous week, as seen in the following chart.
Off-premise sales never really slowed despite the re-opening of bars and restaurants over the last few weeks. During the pandemic beer category, off-premise sales have grown 21.4% (volumes +17.3%) compared to YTD growth of 16%. Beer sales grew 13.1% over that time.
Now that the three largest states have halted on-premise consumption of alcohol either statewide or in certain counties, the impact is uncertain.
Hard seltzer sales grew 234%. Super premiums grew 22.3%, craft grew 17.1%, and FMBs grew 19.3%. Wine sales grew 23.7% up from 20.1% the previous week was driven by wines priced above $20. Spirits grew 39.5%, the strongest week since Cinco de Mayo.
