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National Restaurant Association - Restaurants thaw out after big freeze

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Restaurants thaw out after big freeze

As the country rebounds from the extreme cold snap that caused temperatures to plummet into negative numbers, restaurateurs and industry watchers say they are confident sales and traffic will rebound in the coming weeks.

“As with all extreme weather occurrences, a brief period of cold will likely not leave any lasting negative traces on restaurant sales, but it could affect sales for operators in certain areas of the country if it extends over a longer period,” said Hudson Riehle, the National Restaurant Association’s senior vice president of research. “Our research shows that winter temperatures colder than normal have the strongest negative impact on restaurant sales when it comes to weather conditions. We will have to see what the rest of the winter has in store before knowing what the longer-term potential impact may be.”

From the Northeast to the Midwest to the South, millions scrambled to stay out of the cold and restaurants and retail outlets found themselves facing some sales dips during the holiday season, which typically is a time when business booms. But financial analyst Andy Barish, managing director for global investment banking firm Jefferies Group Inc., said the deep freeze, the result of what is being called a distorted polar vortex, won’t impact the industry for very long.

“This probably is going to create some challenges for fourth-quarter earnings, but I think by the time [those numbers] come out, the stocks may already have reflected the … news and it will be in the past,” he said. “These types of events historically can affect comp-store sales for the month, particularly at companies that have more exposure in the northeast and Midwest, but spread out over the quarter, it’s not as big of an impact.”

Barish added that companies specializing in hot beverages, like Starbucks and Dunkin’ Donuts, probably experienced more traffic than some fullservice operations, which he said consumers tend to visit on a more discretionary basis.

“Not only do the coffee chains serve hot beverages, they’re also more a part of people’s daily habits and rituals,” he said. “I think they’re typically more immune to some external challenges, like weather.”

Starbucks spokeswoman Haley Drage said the company used social media outlets, like Twitter, Instagram and Facebook, to connect with customers during the deep freeze.

In Chicago, where temperatures at one point fell to minus17 degrees, Denny’s franchisee Joey Terrell said his two stores remained open despite the frigid conditions.

“We’ve been open 21 years and … we don’t close,” he said. “We’re always open. And people have been coming out to us – our regulars and others who’ve been traveling. They want hot, hearty stuff, and we’re giving it to them.”

Terrell said traffic was down about 30 percent at the height of the freeze, but a few big sales made up for it. He also said he’s offering promotions to target his senior citizen customers, who make up a good percentage of his business.

“We miss them and want them to come in so we’ve put together a special ‘buy one, get one free offer,’ he said. “They’ll be back soon.”

He also started promoting Denny’s new $7.99 “Skillet” offering before it officially debuted on the menu.

“We let customers order it so our cooks could get some experience with the dish,” he said. “It’s great for the cold weather – a lot of food and it’s hot. Plus, we thought it would be a good way for customers to have a little fun, order from the new menu ahead of time. We also thought about offering coffee at a price equaling the temperature, but how do you charge minus-15 cents?”

Even though sales may have chilled in the cold weather, Barish said operators would make up the difference as the month goes on.

“I don’t think we’ve seen anybody change their plan,” he said. “January is a value marketing time of year, and as people come back from the holiday we’ll see a lot of value offerings and advertising out there.”

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