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Eatertainment's Exposure

Chuck E. Cheese has filed for bankruptcy. S&P Global Market Intelligence said Dave & Busters is more likely to default on its debt than other public restaurant chains. Punch Bowl Social was abandoned by Cracker Barrel, and the founder just stepped down. Rainforest Cafe's Chicago location closed a year ahead of schedule.

So many restaurant companies have fallen into two categories during the coronavirus pandemic: historic increases in same-store sales or declines so severe that the future of the concept is in jeopardy. It's not any question where most eatertainment brands have landed, or how they got there.

And with that, the pandemic adds another bullet point to the list of events and trends that has significantly challenged eatertainment brands.

A long-term challenge for much of the eatertainment category has been a reliance on other industries, such as tourism or shopping. For instance, Planet Hollywood's second bankruptcy came in October 2001, when tourism had plummeted following 9/11. Declines in mall traffic have also proved problematic for many restaurants, especially those that, like some eatertainment concepts, prioritized mall locations.

And for some brands, demographics is also a challenge. Family-friendly eatertainment brands, in particular, have a much more narrow audience than, say, Chipotle. For instance, 29.1% of the U.S. population was under the age of 19 in 1996, versus just 25.7% in 2016. Perhaps this helps to explain the differences between the eatertainment brands of the 1990s, like Rainforest Cafe, and the 2010s, like Punch Bowl Social.

Recently, we've seen the challenges that can come from a specialization in on-premise occasions.

I don't think the coronavirus pandemic will forever remove consumer demands for on-premise occasions and away-from-home experiences like those offered by eatertainment concepts. But I do think the shift toward off-premise, as well as the exposure these chains have faced by being mostly dependent on on-premise sales, means eatertainment brands will find a way to better target off-premise occasions. It could be via virtual brands, party packages or some other innovations, but whatever it is, it will help reduce the category's exposure.

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