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Consumer Behavior Changes Reshape Restaurant Industry

While we believe that most publicly traded restaurant companies will survive COVID-related disruptions, we still believe that the worst may be yet come for the broader industry.

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There is little question that 2020 will go down as one of the most challenging years restaurant operators will ever face and will transform virtually every aspect of the restaurant experience. Before COVID-19, restaurant operators were already undergoing a period of change, including shifts in consumer attitudes regarding digital ordering, delivery, drive-thrus, health and wellness, and dining-in experience. Pandemic-related government-mandated operating restrictions have accelerated many of these trends and left many operators scrambling to catch up, or in many cases fighting for survival. We expect the restaurant industry will become a winners/losers situation after the pandemic, where companies that have invested in new technologies, digitally enabled restaurant formats, and more efficient operational procedures are poised gain market share at the expense of smaller independent players, many of which are unlikely to survive.

We believe we’re effectively seeing six different recoveries play out across the restaurant industry:

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R.J. Hottovy does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.