Restaurant CEOs Blame Presidential Election for Hurting Salesby
BJ’s shares tumble after third-quarter results miss estimates
Dunkin’ CEO says Americans are ‘fed up’ with the election
Restaurant executives are increasingly blaming this year’s presidential election for creating negative news and crimping sales.
Dunkin’ Brands Group Inc. said on Thursday that new U.S. store growth would be at the low end of its previous guidance of 430 to 460 net new locations. Meanwhile, BJ’s Restaurants Inc., a casual-dining chain known for pizza and beer, is blaming the volatile election -- and particularly the debates -- for keeping customers away.
“I think people are rather fed up listening to all the election stuff,” Dunkin’ Chief Executive Officer Nigel Travis said in an interview on Thursday. “Uncertainty is not good for our business because franchisees have to invest and they want some certainty to invest.”
Dunkin’ is nearly 100 percent franchised, meaning independent operators own and run its Dunkin’ Donuts and Baskin-Robbins restaurants.
“I would encourage whoever gets into office to focus on small business because small business is the driver of employment,” Travis said.
Last night, Hillary Clinton and Donald Trump sparred about issues including the economy, abortion and foreign policy in their third and final debate. While Trump’s refusal to commit to accepting the election result was perhaps the event’s most significant moment, he also made history by becoming the first nominee to use the word “liar” against a general-election debate opponent.
BJ’s CEO Greg Trojan said the debates have distracted customers. He also pointed to the general tenor of the election as contributing to an industrywide slowdown.
“The tone of this year’s political season, regardless of where your allegiance may lie, has generated what some would call a nearly unprecedented level of negativity and doubt in the minds of everyday American citizens,” Trojan said on a conference call. “Overall, retail trends and the results of other businesses dependent on consumer discretionary spending confirm that during the quarter, many preferred to stay home versus going out.”
The company posted a comparable-sales decline of 3.4 percent for the third quarter and missed earnings estimates, sending its shares tumbling. BJ’s also scaled back the number of restaurants it expects to open this year, citing the slump. Another problem last quarter: The relatively late timing of the Summer Olympics may have kept Americans from going out to eat as much last quarter, Trojan said.
BJ’s shares fell as much as 9.7 percent to $32.24 in New York after the results were released. Even before the rout, the stock was down 18 percent this year. Canton, Massachusetts-based Dunkin’ Brands dropped as much as 7.2 percent, its biggest intraday decline in a year.
Excluding some items, BJ’s earnings were 30 cents a share in the third quarter. Analysts had estimated 32 cents. The Huntington Beach, California-based chain now plans to open as few as 10 restaurants this year, down from an earlier target of 17.
Still, Trojan sees the picture improving after the election concludes next month.
“Hopefully, post-election, people will get into a more normal rhythm and mindset,” Trojan said on the conference call. “We would look forward to that happening.”
At Dunkin’, Travis agrees: “People want to hear positive news,” he said. “We just need to get behind it.”