This exclusive series to Nation's Restaurant News provides insight into the sales and traffic data from clients subscribing to Black Box Intelligence, a financial performance benchmarking company. The views expressed here do not necessarily reflect those of Nation's Restaurant News.
Spring brought much-needed relief for the restaurant industry, which, based on results for May, has now posted three consecutive months of positive same-store sales, according to The Restaurant Industry Snapshot from Black Box Intelligence and People Report.
On a quarter-to-date basis, same-store sales are approaching 0.5 percent at the end of May, fueling hope that the second quarter of 2014 could be the first quarter since the same period last year in which the industry has reported positive same-store sales.
Same-store sales grew 0.3 percent in May, a decrease of 0.3 percent from the sales growth reported for April.
“Although this slowdown might at first appear discouraging for the industry, it was mostly based on the fact that the comparable month of May 2013 was particularly strong, which resulted in a higher hurdle for May’s sales this year,” said Victor Fernandez, executive director of insights and knowledge at TDn2K, the parent company of Black Box Intelligence and People Report.
“On a two-year basis, same-store sales improved slightly, to about 1.1 percent, for May. The message from the industry continues to be that moderate same-store sales growth might be as good as it gets given the current environment,” he added.
Positive results are expected for the rest of the year, as the second quarter last year was the only quarter that achieved positive same-store sales growth. Easier comparisons for the second half of the year are expected to help results for the rest of 2014.
Same-store traffic declined 1.5 percent for May, a 0.3-percent drop from the rate reported for April.
“Declining guest counts continue to be the main issue for restaurant performance, as every quarter since the end of the last recession has posted declining same-store guest counts, and Q2 … is heading in the same direction,” Fernandez said.
Even if May brought positive same-store sales growth, the improvements were still small, and challenges remain at the local level. Of the more than 180 DMAs tracked by Black Box Intelligence, a little over half, or 56 percent, of them saw same-store sales rise during the month.
There was no substantial change in consumer expectations during May, according to The Restaurant Willingness to Spend Index, published by Consumer Edge Research, which posted a value of 95 for the second consecutive month.
“This index has been stabilized at the highest values it has seen in more than three years, again suggesting the idea that the restaurant spending we have seen over the last two months might be as much as can be expected in upcoming months,” Fernandez said. “The key for the industry accelerating its growth will have to come from substantial consumer income growth in order to translate that relatively positive outlook into actual substantial increases in spending, and that seems unlikely in the near future.”
Job growth in restaurants slowed slightly during April, according to People Report’s latest results. After growing at a year-over-year pace of about 3.8 percent during the previous two months, April saw job growth dip to 3.4 percent.
Despite that dip, the number of jobs offered by the industry has now grown by more than 3 percent year-over-year for six consecutive months. Turnover for both restaurant managers and hourly employees continued to creep up during April, adding to the headaches already experienced by the industry in the form of rising labor costs and potential minimum wage increases.
The Restaurant Industry Snapshot is a compilation of real sales and traffic results from over 180 DMAs from 100+ restaurant brands and over 18,000 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. TDn2K reports on over 30,000 restaurant units, one million employees and 40 billion dollars in sales. The Restaurant Industry Snapshot also includes the Restaurant Industry Willingness to Spend Index from Consumer Edge Research, a monthly household survey of more than 2,500 consumers.