Restaurants prepare for the aftermath of Sandy

Restaurant chains that are highly concentrated along the East Coast are likely to feel the effects of Hurricane Sandy on both their sales and costs for repairs and damaged food. But analysts say there are ways to recoup some of the business lost to the storm.

Chains such as Ruby Tuesday Inc. (RT), Brinker International Inc. (EAT) and Dunkin' Brands Group Inc. (DNKN), which have roughly 30% to 40% of their stores in Sandy's path according to analysts, are likely to be affected the most. The hurricane caused closures of many locations Sunday, and they will remain closed until the storm passes and damage is repaired.

In addition to sales taking a hit, restaurants face food spoilage, repair expenses and other costs in the wake of the storm, said Bob Derrington of Northcoast Research.

"We have very thorough plans in place to ensure adequate resources are deployed to support our stores affected by Hurricane Sandy," a Dunkin' representative said. "The majority of our restaurants are open and taking care of their customers."

Brinker and Ruby Tuesday weren't immediately available for comment.

"Casual-dining chains are typically hurt more than fast-food chains due to the considerable number of employees needed to operate," Mr. Derrington said.

However, restaurants can pick up the sales lost due to closures once the storm is over, as they can frequently be up and running before households have power and families with cabin fever are eager to get out of the house.

"Following the storm's initial impact and as recovery repairs begin, restaurant sales tend to rise given the influx of repair personnel and consumers unable or unwilling to cook during the recovery periods," Mr. Derrington said.

In some cases, stores away from the storm's path and along evacuation routes get a boost in sales that can help offset the negative impact of stores that are closed.

Miller Tabak analyst Stephen Anderson said the restaurants can take some solace in the fact that the storm is hitting early in the week, which is usually the slowest time for them anyway.

"We also think Hurricane Sandy will provide a lift to companies with a high percentage of delivery business, such as Domino's Pizza (DPZ) and Papa John's (PZZA)," he said.