Editor's Note: This content was originally published on
by Jim Probasco.
predicted it. Wall Street apparently confirmed it. The government
shutdown is hurting restaurants, and as a result, restaurant
Leading decliners at noon on Wednesday were
), down more than 4%;
), down almost 2%;
), off by 1.5%,
), down 1.3%; and
), off by 1.2%.
QSR admitted that the economic implications of a government
shutdown -- including the impact on the quick serve restaurant
industry -- depend on the length of the event. The website did
point out that during the last government shutdown in 1995,
government output was reduced by $4.6 billion during the fourth
quarter, and by $1 billion during the first quarter of 1996,
according to the US Bureau of Economic Analysis.
quoted Moody's analysis, Brian Kessler, who said if the current
shutdown lasts three or more weeks, it will lead to "significant
economic damage," potentially reducing the GDP by 1.4% for the
The quick serve restaurant industry is already in decline. A
lengthy shutdown would only make things worse.
The National Restaurant Association's August
Restaurant Performance Index
showed a decline for the third consecutive month in a report
released September 30.
Cause and effect are simple to follow. With about 800,000
government employees off the job, they are far less likely to eat
out. First of all, they are home -- and can eat there. Second, they
don't know how long it will be before they get paid or whether back
pay will be included.
In addition, restaurant owners looking to expand are not able to
get government loans. The longer this goes on, the worse it will be
on the economy, especially in terms of hiring.
Although the Food Safety and Inspection Service will continue its
safety-related activities, according to
, the agency's inability to investigate violations quickly and
completely could have an impact.
In addition, the FDA has suspended routine food safety inspections,
limiting its activity to what it terms "high-risk recalls."
Wall Street, as a general rule, doesn't like government shutdowns.
In 1995, stocks dropped 3.7% overall during the event. It's not
surprising then, that the market has responded in similar fashion
this time around.
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