Yahoo Finance’s Brian Sozzi spoke to Yum! Brands CEO David Gibbs about how the restaurant business is faring amid the coronavirus outbreak and how his company is adapting to new changes.

Video Transcript

ADAM SHAPIRO: Welcome back to Yahoo Finance. We are enjoying a strong rally on Wall Street. The S&P 500, Dow, and NASDAQ all up over 4%. The Dow is up more than 5% right now. Want to let you know that restaurants, obviously, are taking a big hit during the coronavirus crisis. And Brian Sozzi actually spoke with the Yum Brands CEO, David Gibbs. Here's what Mr. Gibbs had to say.

DAVID GIBBS: Well, we have over 50,000 restaurants across the globe. And the vast majority of them are open, over 85%. Where we're seeing restaurant closures, it's more driven by a market making a decision to just shut all restaurants, like essentially the UK and India have recently done or for those few cases where we have restaurants that are dependent on the dine-in business almost exclusively.

We're fortunate at Yum Brands in that, you know, our restaurants, Taco Bells, KFCs, Pizza Huts, and now the Habit Burger Grill, our fourth brand, they depend on a lot of business that's off premise, such as delivery, drive-through, and carry-out. So, you know, we're going through this, like I said, with over 85% of the restaurants open. And feeling good about the way our franchisees and employees around the world are reacting to the challenges of managing in a market with the crisis and taking the learnings that they've got from other markets.

ADAM SHAPIRO: And Brian Sozzi joins us now with more. Because a lot of restaurants, at least here in North America, are saying they're not going to pay the rent. But tell us more about what you learned from the CEO at Yum.

BRIAN SOZZI: Yeah, good to see you, Adam. Listen, David Gibbs, he's up against it here. He just took-- he's a Yum Brands veteran executive, took over in January. And by his own admission, he told me this is not how he expected to spend his first 120 days on the job. But to his point, 85% of the restaurants are, in fact, open, 15% closed.

But the bottom line is, and it's not just Yum Brands. It's the small restaurant chains. You can't stay in business just living on delivery. And obviously, you can't stay in business if your restaurant is completely closed. Which brings me to the point on some of these retailers and restaurants, I saw Cheesecake Factory come out overnight and say, hey, we can't pay our rent on April 1st. And it makes sense. They have no cash coming into their business. They might get a couple delivery orders a day. That is just not going to cut it.

JULIE HYMAN: Hey Brian, it's Julie here. Wanted to talk a little bit more about that story about Cheesecake Factory saying it's not going to be able to pay rent. We've heard-- hearing similar things from some Subway franchisees, Mattress Firm, a non-food retailer.

And it seems, just from a layman's perspective, that if they're not going to pay rent, there's not really anything-- I mean, what's the landlord going to do? It's not like they can find another tenant right now. So it seems like that that's just what's going to happen. But you wonder about the ripple effect for, say, a mall owner or a landlord at this point in time as well.

BRIAN SOZZI: No, right on Julie. And I think what you're seeing with Cheesecake Factory is that they're calling out, behind the scenes, that maybe the landlords are not stepping up and giving them the relief they-- that they so desperately need at this point. And to your point, the next wave is a lot of retailers. Retailers were supposed to open, a lot of them in the mall, within the next week. That is not going to happen. We saw Abercrombie & Fitch come out today, they're going to push out their store openings from March 28th to early April.

And I think you're going to see a lot more of that across retail. So the onus is on the mall retailers, the mall owners, to step up and give relief to a lot of these retailers. Because if not, you're going to have a lot of dead malls before the holiday shopping season. That's just the bottom line.

- Sozzi, I got to ask, it seems like a lot of small businesses, right, they have about three weeks of cash on hand. When you talk about the Cheesecake Factory and those large names that are familiar to most Americans prevalent around the country, are their cash positions any better than that? Or they're just as crunched as everybody else on Main Street?

BRIAN SOZZI: No. Cheesecake Factory, a lot of the national chains and even looking at Yum Brands, Yum Brands just tapped its credit facility. They now have $1 billion in firepower to help out their franchisee's network and even the employees in their company-owned stores. So the national chains will be OK. Cheesecake Factory, not a good headline for them, not a good situation for them, they'll be all right.

But it is the local pizza owner, a lot of local chains that are closed. They don't know when they'll remain open. And a lot of them could go out of business. A lot of folks I've talked to in the restaurant industry the past week or two suggest 33% of the restaurants in the US could stay closed. That's startling. It's just the reality of the situation.

ADAM SHAPIRO: Brian Sozzi, thank you. We are going to keep an eye on that as we keep an eye on this rally on Wall--