As expected, March brought good news for the restaurant industry once the crippling effect of this year’s unusually cold winter started fading away.

The latest Restaurant Industry Snapshot from Black Box Intelligence and People Report shows that same-store sales grew 0.7 percent in March — a strong 1.4-percent improvement from the 0.7-percent decline reported in February and the first growth since November 2013.
 

“The year-over-year performance for March was especially strong considering that the bar was set pretty high by March 2013, which posted same-store sales growth around 1.5 percent,” said Victor Fernandez, executive director of insights and knowledge for TDn2K, parent company of Black Box Intelligence and People Report. “That represents same-store sales growth of over 2.0 percent for March 2014 when aggregated on a two-year basis. As we have been predicting, there was significant pent up demand in consumers for incremental spending in restaurants, but that demand continued to be restricted by the weather.”

The positive March result, however, was not enough to pull the industry’s same-store sales growth into positive territory for the first quarter of 2014. Same-store sales fell 0.2 percent for the first quarter of 2014, compared with a decline of 0.4 percent in the first quarter of 2013. This is the third consecutive quarter in which same-store sales have been negative for restaurants.

“The industry’s overall same-store sales issues run deeper than simply having experienced a very bad winter,” said Wally Doolin, founder of Black Box Intelligence. “The real problem is rooted in the declining same-store traffic, which the industry has been experiencing for years.”



Same-store traffic growth fell 1.2 percent in March. Despite the significant 2.0-percent improvement in traffic compared with February, the results highlight the industry’s issue with attracting guests. Same-store traffic has been negative every month since March 2012.  

In the first quarter of 2014, same-store traffic fell 2.2 percent. This was a small improvement from the 2.3-percent decline seen during the fourth quarter of 2013, but still not a good sign for the industry considering the average quarterly same-store traffic growth since the beginning of 2012 is -1.6 percent.

When looking at rates of same-store traffic growth by region for the quarter, weather appears to be a factor interfering with people going out to eat. The three best performing regions based on growth in guest count were Texas, the Western region and Florida. The three worst performing regions during the first quarter were New York/New Jersey, the Mid-Atlantic and the Midwest — all areas that were heavily affected by the winter storms.

The Restaurant Willingness to Spend Index, published by Consumer Edge Research, was 92 points in March, showing a small drop from the 94 reported for February. This last drop notwithstanding, the consumer’s willingness to spend in restaurants is higher now than it was a year ago, which is a positive indicator for the industry.

Growth in the restaurant industry continues to be driven by the opening of new units as same-store sales continue to struggle. Evidence of this growth is the strong job creation trend, according to the latest numbers from People Report. Year-over-year job growth for the industry was 3.8 percent during February, rising from 3.3 percent reported for January.

The pressures of increased recruitment levels, as well as the tightening labor market, continue to be felt in the form of increased restaurant turnover levels.   

The Restaurant Industry Snapshot is a compilation of real sales and traffic results from over 180 DMAs from 100+ restaurant brands and over 17,000 restaurants that are clients of Black Box Intelligence, a TDn2K company. Currently, data is reported in four distinct segments: casual dining, upscale/fine-dining, fast casual, and family dining. Black Box Intelligence is a sister company to People Report, which tracks the workforce analytics of one million restaurant employees. The Restaurant Industry Snapshot also includes the Restaurant Industry Willingness to Spend Index from Consumer Edge Research, which is a monthly household survey of more than 2,500 consumers. Consumer Edge Insights is a marketing partner of Black Box Intelligence and People Report.