By Tonya Garcia, MarketWatch
Chico's announced a phased reopening of its shops starting May 4
If you're in Georgia and want to have dinner out at a restaurant, there's a table waiting for you at the Olive Garden.
Darden Restaurants Inc. (DRI) , Olive Garden's parent company, opened most of its dining rooms, about 100 in that state, for service on Monday. The company also opened some of its restaurants in Tennessee for dine-in service.
Darden's portfolio of restaurant chains includes LongHorn Steakhouse, Bahama Breeze, The Capital Grille and other names in addition to Olive Garden.
Going out for a meal at the local Olive Garden is different amid COVID-19. All workers will be wearing masks, the dining room layout has been changed in order to promote social distancing and, in keeping with re-opening rules issued by the state, Darden Restaurants will only serve parties of six or fewer.
State guidelines also limit the number of guests inside restaurants to no more than 10 people per 500 square feet of dining space.
See:States start to reopen, ending coronavirus lockdowns: Restaurants and cinemas open doors in Georgia; Texas on tap for May 1 ()
In addition, the company says tables are disinfected after every guest, there's frequent hand-washing among staff, and workers have their temperature checked before each shift.
Texas has also announced plans () to lift some restrictions, with stores, restaurants, museums and more allowed to reopen at 25% capacity starting Friday. A spokesperson for Darden Restaurants told MarketWatch "it's too soon to say" if restaurants will reopen in that state on Friday and the company is reviewing it.
Restaurants nationwide have been operating with takeout, delivery and pickup-service only for weeks due to stay-at-home orders to stop the spread of coronavirus. The measures have put significant pressure on restaurants and retailers, with many restaurants likely not surviving.
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In late March, Darden Restaurants said it experienced a sharp same-restaurant sales decline () after it ended dine-in service. However, the company announced earlier this month that it had $1 billion ( ) in cash on hand.
"The quick re-opening of dining rooms in Georgia and Tennessee suggests that Olive Garden will be at the forefront of re-opening dining rooms as state restrictions are eased," wrote SunTrust Robinson Humphrey analysts, calling the approach "aggressive."
Stifel analysts note that many of the state re-opening plans introduced so far include guidelines to continue social distancing, and some chains may choose to hold off on re-opening in order to evaluate the rules.
"The average casual dining chain has seating capacity for 250-to-300 people; even at half capacity this would require over 6,800 square feet of available dining space," analysts wrote, regarding the reopening of restaurants in Georgia. "Of the casual diners we cover, Darden has the most exposure to Georgia, with approximately 6% of system units located in the state."
Stifel rates Darden shares buy.
Texas will be the first of what Stifel calls the "Big Three" in casual dining to give guidance on reopening. The other two states are Florida and California.
Darden has tumbled 35% over the last year. The S&P 500 index is down 0.1% for the past 12 months.
On the retail front, shares of Chico's FAS Inc. (CHS) soared 28.7% in Tuesday trading, ultimately closing up 12.7%, after the women's apparel and accessories retailer announced plans to begin reopening stores on May 4.
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Chico's portfolio includes the namesake chain, White House Black Market and Soma.
The reopening will happen in three phases: first the company will use its stores to fulfill online orders, then buy-online-pickup-in-stores using contactless curbside pickup, and, finally, shop by appointment for all of its brands.
"We believe we will have some significant advantages in the next several months as the majority of our stores are under 3,500 square feet and are located in easily accessible shopping plazas," said Chief Executive Bonnie Brooks in a statement. "Due to the smaller size of our boutiques, Chico's FAS has the ability to reopen quickly and safely and to follow enhanced safety precautions."
Brooks says Chico's has experienced double-digit digital growth over the past six weeks. The growth was driven by certain categories, including active and sleep, and, according to Brooks, a tech enhancement. Store management was given a handheld device containing proprietary styling software, Style Connect, that "allows for intimate but distanced connection" with customers.
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For the 13 weeks ending February 1, same-store sales were up 2.2%, after three consecutive quarters of negative same-store sales. For the four weeks ending February 29, same-store sales were up 2.7%.
Chico's has reduced weekly cash burn "significantly" in the past few weeks, and Interim Chief Financial Officer David Brooks says the company has taken action to cut operating expenses by 30%. First-quarter results will be announced on June 10.
Chico's stock has plummeted 55.8% over the past year.
-Tonya Garcia; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
May 02, 2020 09:12 ET (13:12 GMT)
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