Restaurants Rally on Vaccine News, Reopening Plans, Fed Support
Shares of restaurant conglomerate Brinker International, owner of Chili’s and Maggiano’s, rallied 30% today. Other publicly traded restaurants traded higher across from the board: Del Taco rallied 8%, Denny’s rallied 17%, Cheesecake Factory rallied 15%, and the multi-billion dollar owner of Olive Garden and LongHorn Steakhouse rallied 5%. It was a good day for investors generally, with a closing gain of 2.7% on the S&P 500 Index.
Restaurants benefitted today from several pieces of news. This morning, Gilead Sciences reported positive results for its COVID-19 treatment candidate, remdesivir. Gilead is on track to make remdesivir the first FDA-approved drug for coronavirus patients. At a public White House press conference this afternoon, Dr. Anthony Fauci confirmed the results as “highly significant” and “really quite important,” although final formulation work will be required to confirm dosing guidelines. As scientists advance their treatments and cures, the restaurant industry benefits from the renewal in public confidence.
Today’s second positive headline arrived at 2:00pm EDT. The Federal Reserve stated that it “is committed to using its full range of tools to support the U.S. economy in this challenging time.” With trillions of dollars being pumped into the economy, restaurants will be obvious beneficiaries of increased consumer spending. Shares of all publicly traded restaurants traded higher immediately after the Fed’s vote of confidence.
Thirdly, many restaurants announced plans to reopen dining rooms soon. Georgia, Texas, Tennessee, Ohio and Alaska have already announced plans to allow reopenings, but many restaurants have hesitated. Darden Restaurants took a bold step today, disclosing that roughly 100 of its dining establishments in Georgia are open for business, with more doors opening by the day. Darden also revealed that it is reopening locations in Tennessee, and that its franchisees are moving as fast as possible in Texas but that “it’s too soon to say.”
Finally, the White House today announced Operation Warp Speed, a pharmaceutical partnership whose goal is to have 300 million doses of coronavirus vaccine available by January. There is no precedent for such rapid development of a vaccine, which would normally take over two years. The World Health Organization estimates that there are approximately 70 coronavirus drugs progressing through clinical pipelines around the world.
It was certainly a positive day, with medical advancement toward a coronavirus treatment, aggressive support from the Fed, and progressive reopenings of shuttered dining rooms. More states are planning to reopen parts of their economies in safe and sustainable ways within the month of May.