By Heather Haddon 

Restaurants chains say they are getting a sales bump from the latest round of stimulus money going to households, but spending patterns from the first batch of checks earlier in the pandemic suggest the lift can fade quickly.

The roughly $900 billion coronavirus aid package signed into law last month provided a second round of stimulus payments----$600 per adult and $600 a child. While the amounts are lower than the $1,200 and $500 delivered last spring, they are having an impact, at least short-term, according to some restaurant executives and industry data.

Church's Chicken, Checkers Drive-In Restaurants Inc., Noodles & Co. and TGI Fridays are among the companies crediting higher sales to the stimulus, according to executives. Some McDonald's Corp. restaurant owners also attributed strong January sales to the recent checks, as did fine-dining chain Fogo de Chão.

Chris Elliott, the Tampa, Fla.-based owner of restaurant chains that include Beef 'O' Brady's and the Brass Tap, said the second round of checks contributed to a 6.5% increase in sales this month compared with last.

"People relax a little, and they want some normalcy in their lives," Mr. Elliott said about the stimulus, adding that it coincided with a number of big football games in the area, leading some patrons to order in food.

It is unclear how long the lift will last from the stimulus money, however, as struggling restaurants navigate fluctuating rules governing indoor dining and other coronavirus-related restrictions. Tens of thousands of restaurants have closed, and more are expected to do so this winter. Estimated restaurant sales fell 19.5% last year compared with 2019, trailing only clothing retailers, according to data from the Commerce Department.

The recovery from the pandemic remains uneven. Unemployment has fallen from earlier in the pandemic, but remains elevated compared with last year. Consumer spending has grown from the depths of the pandemic, but Americans are paying for more goods than services.

The first round of stimulus checks that went out in April helped boost sales for major restaurant chains by 3% to 12%, according to industry research firm Revenue Management Solutions, which said some restaurant companies are also getting a bump after the most recent checks went out.

However, weekly sales from several casual-dining chains showed the initial sales improvement faded quickly after the first checks in April, according to company figures.

Some restaurant chains said the latest stimulus comes at an opportune moment, as they have started to introduce new products and promotions after putting many on pause during the early months of crisis. A number of fast-food chains have released new fried chicken sandwiches, for example.

Katelyn Alves, a 29-year-old operations administrator for a credit union who lives in northern California, said she spent some of her stimulus money on delivery of a steak bowl, chips and a soda from Chipotle Mexican Grill Inc.

"I have been saving my money during the pandemic but this time, I thought it might be good to treat myself," Ms. Alves said.

Frances Allen, chief executive of the 840-unit Checkers and Rally's drive-through brands based in Tampa, Fla., said checks during the pandemic have provided the bump that the chain typically sees when federal tax rebates go out.

"A stimulus check arriving in the hands of customers gives every [fast-food] chain and many others a boost," Ms. Allen said in an interview.

The restaurant sector has continued to lobby for federal funds to benefit operators and their customers. President-elect Joe Biden last week called for a further $1.9 trillion stimulus plan, saying Americans need more funds to help the U.S. economy recover from the pandemic.

Kimberly Dines, a 42-year-old Monroe., Mich., resident who is unemployed, said she and her husband treated themselves to a McDonald's dollar meal with stimulus money in the spring but don't feel they can now.

"I don't see the ability arising for us to be able to eat out," she said. "Our struggles have been so overwhelming."


(END) Dow Jones Newswires

January 20, 2021 11:19 ET (16:19 GMT)

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