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As Local Restaurants Continue Struggling, Industry Outlook Appears To Be Stabilizing

Published on Wednesday, October 21, 2020 | 4:33 pm

According to Moody’s Investors Service, the restaurant industry has started to stabilize as consumers slowly return to restaurants in areas where restrictions on dine-in service have been lifted.

The bond rating agency upgraded the industry’s economic outlook to stable from negative on Tuesday, according to the Restaurant Business website.

The industry’s outlook was downgraded to negative since the pandemic forced restaurants to close their dining rooms in March to help stop the spread of the coronavirus.

In July, 19 counties were allowed to resume limited dining-room service in California. However, eateries in Pasadena and the rest of L.A. County remain closed to patrons.

Locally, the city is working on a plan for local restaurants that will allow them to continue to work under inclement weather conditions.

Declining revenues caused by the pandemic has forced the closure of several restaurants in Pasadena.

Moody’s ratings help determine interest rates that companies pay on their debt. An improving outlook for the industry suggests it has a better view of the coming months and suggests that the darkest times of the pandemic could be over, at least for the large chains.

“This year, for the first time in a long while, the number of U.S. restaurants is expected to decline, reflecting the devastating effect the pandemic is having on the industry,” Bill Fahy, senior credit officer with Moody’s, said in a statement. “And more closures are likely, depending on how long this operating environment continues.”

According to the report, restaurants continue to struggle with restricted capacities and social distancing requirements.

Those requirements are forcing restaurants to continue focusing on takeout strategies.

The report also said that casual dining concepts are “the most exposed to performance declines,” with “large, strongly capitalized companies better positioned to weather the storm.”

Operating profits are also expected to decline by more than 30 percent this year. But profits could rebound next year by 15 percent.

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