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Global 2023 Restaurant Outlook: Out of the Frying Pan and into the Fire

DBRS Morningstar released a commentary titled “Global 2023 Restaurant Outlook: Out of the Frying Pan and into the Fire.” The global restaurant industry is feeling the heat once again. We believe the sector's volumes will remain under pressure as a result of the challenging macroeconomic backdrop and decreasing consumer purchasing power, resulting in a longer post-pandemic ratings recovery for restaurant companies. That said, we anticipate any negative effects to generally be more meaningful on full-service restaurants than quick-service establishments. We believe this divergence will also translate to restaurant companies' credit risk profiles. Companies heavily weighted toward quick service will be more insulated from negative rating actions, while those heavily weighted toward full service are generally more exposed to negative rating activity.

“While pandemic-related pressures on traffic gradually eased, new macroeconomic challenges started to emerge in 2021 and accelerated through 2022, namely surging levels of inflation and rising interest rates,” notes Moritz Steinbauer, Vice President, Team Lead Diversified Industries. “We believe this will extend to the restaurant sector's volumes, as consumers eat out less often and aim to spend less when they do.”