Even steakhouses are getting hurt by the oil crash.
Texas holds some of the richest shale plays in the US, and has been one of the places most affected by the downturn in crude oil prices.
The Dallas Federal Reserve’s monthly manufacturing report consistently includes commentary from business owners whose operations are linked to the oil industry.
And on Thursday, we got another anecdote from the management of Del Frisco’s Restaurant Group, an operator of steakhouses across America and based in Texas.
During the company’s earnings call, the company noted that sales at individual restaurants with exposure to the energy sector declined.
After an analyst asked about oil-impacted markets, here was the response from Thomas Pennison Jr., chief financial officer (transcript via Bloomberg, emphasis ours):
“To start with the magnitude, when you look at three locations on a 40-comp base having 140 basis points impact, as you can imagine, they are definitely double-digit negatives of the three locations in Houston and that’s the three that we’re referencing, one in each concept [i.e., restaurant brand.] It’s pretty much the lowest performer in each of the concepts.
… I don’t know that today it as much ties to a specific stock price as well as it’s the sentiment of what people feel about their jobs there, and there’s still some companies that are doing layoffs there.”
Del Frisco is obviously not an oil company. But if workers continue losing their jobs and consumer sentiment remains sour, it could continue to hurt their restaurants.
But oil prices, which have rallied more than 20% this year, may now be turning the tide.
Mednansky said, “We’re starting to hear from our general managers who talk to their guests in the industry that they’re starting to feel better, and once they have cleared a hurdle, and that hurdle always is that they see daylight, that’s when they start spending more in entertainment.”