With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
The optimism comes after years of negative outlooks and ratings downgrades for many operators in the restaurant space who were saddled with debt from frenetic growth in the early 2000s, and then struggled to keep cash flow positive as diners cut back on eating out.With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
“I think there has been some stabilization on the credit side of the business,” said Morningstar restaurant analyst R.J. Hottovy.With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
“With improved results we’re seeing better cash flow,” which allows operators to pay down debt and meet their obligations, he said. With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
As the largest restaurant companies began to report first-quarter earnings, Moody’s Investors Service revised its outlook for both OSI Restaurant Partners Inc., the owner of the Outback Steakhouse chain, and the entire restaurant industry to stable from negative. In the OSI research note, Moody’s said it now believes debt protection metrics will marginally improve at the Tampa, Fla.-based company and are in the correct range to support the company’s debt ratings.With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
Moody’s also increased OSI’s speculative grade liquidity rating by a notch, saying the company now has “good liquidity” and enough cash flow and balances to fund all of its cash requirements.With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
The change in outlook for the industry as a whole earlier last month was another sign that ratings agencies are expecting to see some improvement in the operating environment, which has been dismal as consumers have saved rather than spent. The industry’s negative outlook rating at Moody’s had been in effect since 2008, when consumer spending took a nosedive as diners worried about the state of the economy, job security and rising home foreclosure rates.With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
Moody’s said the new outlook reflects “the success the industry as a whole has had in reducing costs in response to weak consumer spending.” The industry has slashed operating costs for the past two years by closing underperforming stores, offering smaller portions and – in some cases – changing ingredients to lower commodity costs.With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
The ratings agency also noted that although a large number of operators are still reporting negative same-store sales, the declines are decelerating, which Moody’s expects to continue over the near term.With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
Several first-quarter reports have also showed improved balance sheets and debt levels. DineEquity Inc., for example, said Tuesday it was able to lower its securitized debt by $55 million during its first quarter and has decreased its total outstanding debt levels by $375.5 million since it bought the Applebee’s chain in November 2007. It holds about $1.6 billion in long-tern debt. With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
Domino’s Pizza Inc. also has been working to repay debt, resulting in an average outstanding debt balance, excluding capital lease obligations, of about $1.5 billion in the first quarter of 2010, compared with $1.7 billion for the first quarter of 2009.With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
Lauren Shepherd is a contributor to NRN. Contact editor Sarah Lockyer at [email protected]. With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
With credit conditions in the overall economy improving, ratings agencies and analysts alike are becoming more optimistic that restaurants can pay back debt, improve credit metrics and begin to use capital for growth again.
