Even in good times, retail and restaurants have always been tough, especially at the small-business level. But lately, the challenges have intensified even more due to the threat of food-delivery apps for restaurants and e-commerce for retailers. And now the coronavirus and its consequences are going to be a negative shock in this brutal environment.
Existing Trends Challenging
Both of these trends are changing with younger people more likely to order food through apps and shop for items online.
Food-delivery apps charge a commission, up to 30%, to restaurants which makes them a "necessary evil" in order to stay competitive that hurts margins. This makes them more vulnerable to any sort of disruption. Retail stocks are already facing competition from Amazon
Thus, it's already tough for many restaurants and retailers, and the coronavirus outbreak may be already causing a major disruption that could persist for weeks if not months. Then, there will also be fears that this behavior and patterns may not return to normal.
In addition to these fears, there are the normal risks that come with a slowing economy like lower discretionary spending, difficulty to access credit markets, lower stock prices, and potential bankruptcies.
Given that the disease has been spreading and expectations that a "shutdown" may be necessary for the next three to eight weeks, restaurants and retailers will see less foot traffic. A lucky few will be able to make up for this with a more online revenue.
Struggling Names
Even now, restaurants and retail at the national scale were struggling and seeing bankruptcies during good times. National chains like Bloomin' Brands
Red Robin Gourmet Burgers,
Retail stocks will also be hurt by these developments. Some of the most vulnerable retailers include Macy's
