WWith vaccination rates rising and consumers scrambling to get back on track, many of the biggest names in the hospitality, restaurant and leisure industries have begun to rebound in Forbes’ Annual ranking of the world’s 2,000 largest public companies.
Fast-food chains have weathered the pandemic better than the rest of the restaurant industry, largely thanks to drive-thru service and digital ordering. Two good examples are McDonald’s, the world’s largest fast food chain, and Starbucks, which are the only restaurant companies in the top 500, at No. 222 and no. 301, respectively. Our rankings are based on a composite score calculated from revenue, profit, assets and market value.
Consider that approximately 95% of McDonald’s restaurants in the US and more than two-thirds worldwide offer drive-thru service, a critical feature during months of social distancing. Additionally, the investments McDonald’s made in its digital channels during the pandemic have been paying off. In the first quarter of 2022, McDonald’s reported $5.67 billion in revenue, up 10.5% from the same period last year. Digital sales, including mobile app, delivery and kiosk sales, are up 60% compared to just a year ago. Sales through the new app-driven MyMcDonald’s Rewards loyalty program accounted for more than 30% of total system sales in McDonald’s six major markets. Looking ahead, McDonald’s is doubling down on off-site dining. Last October, the company strategically partnered with IBM to develop artificial intelligence technology to automate vehicle access lanes.
Similarly, Starbucks also plans to accelerate growth with 90% of new locations featuring drive-thru lanes, interim CEO Howard Schultz said on a recent earnings call. Drive-thru and mobile orders accounted for 70% of US sales last quarter, with delivery up 30%.
The biggest mover in the sector was Darden Restaurants, which jumped an impressive 638 places to break into the top 1,000 at no. 980. Darden’s stable of full-service restaurants includes Olive Garden, LongHorn Steakhouse and a half-dozen others. Interestingly, while Darden’s chains are informal affairs, off-premises sales accounted for 30% of total sales at Olive Garden and 16% at LongHorn Steakhouse. Digital transactions represented 63% of all off-premises sales during the quarter and 12% of Darden’s total sales, according to the company’s latest financial report.
Hotels and resorts were hit hard in the early days of the pandemic, but the sector appears to be back on track for a full recovery. In March, US hotel gross operating profit per available room (known as GOPPAR) hit its highest level since November 2019, according to STR profit and loss data. The Baird/STR hotel stock index rose 3.1% in the first four months of 2022.
The world’s largest hotel company, Marriott, rose to no. 611 on our 2022 Global 2000 list, jumping more than 250 places in the last year, though still falling 200 places below its pre-2019 pandemic ranking of no. 411. Marriott reported first quarter net income of $377 million, on par with the $375 million reported in the first quarter of 2019 and a big improvement on the reported net loss of $11 million in the first quarter of 2021.
The casino sector is also recovering, generating more revenue in 2021 than any other year in the history of the industry, according to the American Gaming Association. Gross revenue hit a record $53 billion, beating the previous record of $44 billion, set in 2019, by more than 20%. MGM Resorts catapulted over 500 locations to land at no. 743 and Caesars Entertainment moved up 200 places to no. 1172.
And for cruise lines, what a difference a year has made. This time last year, cruising was still on hold after an abrupt halt to travel in early 2020 due to the pandemic. Earlier this year, the Centers for Disease Control and Prevention lowered its Covid-19 recommendations for cruise ships, finally lifting all health warnings at the end of March.
Still, full recovery for cruise lines will take time. Industry leader Carnival Corporation dropped more than 100 places to no. 1,219, a far cry from its pre-pandemic position in the top 500. As of the close of the first quarter of 2022, 75% of Carnival’s fleet was back in operation, with 54% occupancy across all ships in service, according to the cruise line’s most recent earnings call. Those metrics should improve significantly by the end of the year. The company expects to start turning a profit in the third quarter of 2022, but forecasts a net loss for the full year.
Of course, if Covid-19 has taught us anything, it is to be very careful with forecasters who break the confetti prematurely. This time last year, Pollyannas bragged about the end of the pandemic, only to see the delta and omicron variants bring even bigger increases in the second half of last year and during the holiday season.