Fitch Report: Heightened Credit Risk Continues in the Restaurant Sector - Highly Lvgd Most at Risk

CHICAGO--(Business Wire)--
The restaurant industry continues to endure the negative effects of the U.S.
recession and the credit crisis in 2009, according to a new report released
today by Fitch Ratings. Most companies in the industry are facing rising
borrowing costs caused by the combination of a challenging operating environment
and difficult credit conditions. The quick-service restaurant (QSR) segment,
however, is better positioned to withstand the current economic stress and
market downturn.

"Given that efforts to stimulate the economy will take time to materialize, a
sustainable turnaround is still not anticipated in 2009," said Carla Norfleet
Taylor, Director at Fitch Ratings.

According to the report, Fitch expects the following themes to continue to
permeate the industry in 2009:

--Sluggish same-store sales growth, which will continue due to rising
unemployment, low consumer sentiment and reduced discretionary spending.

--Moderating food cost inflation; however, the benefits realized depend on the
timing of contract expirations and exposure across various commodities.

--Reductions in capital expenditures and new unit development, primarily in
full-service dining, as firms focus on maintaining adequate liquidity.

Since many firms in the restaurant industry are displaying weaker credit
profiles, those having to renegotiate bank credit agreements are facing more
stringent borrowing terms, at a time when access to the bond market is
challenging at best. "Preserving liquidity and maintaining strong bank
relationships is paramount in this environment and will be the focus of most
management teams," said Wesley E. Moultrie, II Senior Director at Fitch Ratings.

"While credit profiles are weakening across the industry, most of the large
investment grade chain restaurants have limited near-term maturities and are
currently generating free cash flow. They therefore have ample liquidity to
weather the downturn," added Taylor.

Default risk has increased for highly leveraged chains, franchisees and
independents, as seen by the number of bankruptcy filings in the family dining
and bar and grill segments during 2008. "While the restaurant industry is
extremely fragmented, in aggregate outstanding debt and loan obligations for
those entering bankruptcy could be considerable," said Taylor.

The following is a list of publicly rated Restaurant or Foodservice companies
and their current Fitch Issuer Default Ratings(IDR) and Outlooks:

--McDonald's Corporation: 'A', Stable Outlook

--Burger King Corporation: 'BB', Positive Outlook

--YUM! Brands, Inc.: 'BBB-', Stable Outlook

--Darden Restaurants, Inc.: 'BBB', Negative Outlook

--ARAMARK Corporation, 'B', Stable Outlook

The full report, 'U.S. Restaurants/Foodservice, Heightened Credit Risk Continues
- Highly Leveraged Firms at Risk' is available on the Fitch Ratings' web site at
www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, Chicago
Carla Norfleet Taylor, CFA, 312-368-3195
Wesley E. Moultrie, CPA, 312-368-3186
or
Media Relations:
Cindy Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com

Copyright Business Wire 2009