J. Alexander’s has been forced to close more than 20 percent of its dining rooms, causing sales to drop 20 to 30 percentage points since the early fall.
Certain markets like Illinois, Kentucky, Michigan, Missouri, Pennsylvania, Maryland, and Colorado have forced the brand to close dining rooms in 10 of its 46 locations. CEO Mark Parkey estimated that 50 percent of seats are available on a consolidated basis; that’s down from 60 percent in early November.
J. Alexander’s has strived to expand outdoor seating where possible to meet consumer demand, supplement its off-premises program, and keep employees.
In September and October, J. Alexander’s captured nearly 90 percent of prior year’s sales. That dipped to just under 80 percent in November, and in the four weeks since restrictions have been added, sales are now between 60 and 70 percent of the prior year. The brand cautioned that sales could decrease further if government mandates continue to tighten.
In light of the closures, off-premises has remained strong in recent weeks at roughly $700,000 to $800,000 per week. J. Alexander’s is taking advantage of this growth with the introduction of “Holiday Family Packs” and other seasonal offerings. In Q3, off-premises accounted for 15 to 20 percent of sales, reaching $625,000 on average per week. J. Alexander’s expected a range of $600,000 to $700,000 through Q4, but closed dining rooms have elevated the program even higher.
“Our entire team has remained steadfast in one common goal throughout an incredibly turbulent year to provide the highest quality food and service to our guests that have continued to support us throughout the year in order to emerge on the other side of this pandemic as a stronger company,” Parkey said in a statement.
A month ago, J. Alexander’s estimated that it would be cash flow positive in the range of $400,000 to $450,000 per week in Q4, excluding the $10 million voluntary repayment of loans. It also predicted that when including the $10 million, its weekly burn rate would be approximately $265,000 to $315,000. Because of the increased restrictions across several markets, J. Alexander’s said the estimations are no longer valid.
However, the chain still believes it will have adequate liquidity for the remainder of fiscal 2020 through fiscal 2021. As of Sunday, J. Alexander’s had $8.9 million in cash on hand.
“We continue to navigate the ever-changing landscape in which we operate, and we are working hard to ensure that we have explored every alternative and opportunity available to us to continue to provide our loyal guests with the outstanding dining experience they have come to expect from us over the years in a healthy and safe environment,” Parkey said.
