Shares of Dave & Buster's Entertainment (NASDAQ: PLAY), BJ's Restaurants (NASDAQ: BJRI), and Texas Roadhouse (NASDAQ: TXRH) are down roughly 19%, 13%, and 5% around 2:30 p.m. as investors bail on restaurant stocks in fear COVID-19 will cripple foot traffic.
It was a brutal, yet predictable, start of trading Thursday morning as broader markets plunged 7%, which triggered a halt in trading. The night before, it was announced that NCAA college basketball tournaments would be played without crowds, the NBA suspended its season as it reported at least one player had tested positive for COVID-19, and President Donald Trump declared restrictions on travelers coming to the U.S. from Europe.
It's clear that the COVID-19 pandemic has the potential to slow global economic activity, but it's also uncertain how long the impact will last or how severe it will be. It's also clear that the restaurants and entertainment will be heavily affected as public health officials warn consumers to avoid public gatherings and encourage "social distancing." As you can see in the graph below, the three previously mentioned stocks, and the broader restaurant industry, have been in near free fall over the past couple of weeks.