The restaurant industry posted a same-store sales increase in February, after reporting disappointing January results, but the growth was far from robust.

February’s anemic same-store sales growth of 0.4 percent continues to fuel fears that consumer spending at restaurants has slowed to a crawl, according to data reported by TDn2K’s Black Box Intelligence through The Restaurant Industry Snapshot, based on weekly sales from over 23,000 restaurant units and more than 120 brands, representing $57 billion dollars in annual revenue.

The average growth rate reported for the five months since the beginning of the third quarter last year has been 0.1 percent. 

Several external factors outside the economy and consumer sentiment impacted sales in February, according to Victor Fernandez, executive director of insights and knowledge for TDn2K.

“On one hand, the 2015 Super Bowl was included in January’s numbers, while this year, the game was played a week later and fell within February’s results,” Fernandez said. “This meant February’s restaurant same-store sales were negatively impacted by the shift, since restaurant sales are hurt by this event (especially true for full-service restaurants more dependent on the dinner daypart). On the other hand, severe winter weather continued to be a factor during February. As an example, the third week of the month saw same-store sales growth over 6 percent boosted by regions in the eastern part of the country that experienced soft sales comparisons due to bad weather last year, and which posted sales growth rates above 14 percent for the week.”
Sales growth in February was also challenging for the industry because of its strong performance a year ago. At 2.3-percent growth, February 2015 is tied with June for the best month based on same-store sales growth during the last 13 months. On a two-year basis, same-store sales growth was about 2.7 percent in February, boosted by an increase of almost 5 percent in average check.
Same-store traffic fell 1.3 percent in February, an improvement of 1.8 percent from January’s results, and the best traffic performance since September 2015. Although traffic growth is also affected by the same external factors that affect sales, there was an interesting dynamic regarding average check in February that may also be driving traffic improvement during the month. 

Average check grew only 1.8 percent in February, the lowest increase in almost two years. The slowdown in average check growth in February compared with the previous months suggests that brands may be relying more on price promotions to address consumer dining patterns.
The best performing region in February based on same-store sales growth was New England. This region benefited from favorable sales comparisons. New England had the worst same-store sales growth in February 2015. Weather has played a major part in this region’s results during the winter months over the last few years. The opposite occurred in Florida, which was the softest region in February 2016, but among the nation’s strongest a year ago.
The softness of February’s sales results can also be seen at the individual market level. Only 95 of the 193 DMAs covered by Black Box Intelligence, or 49 percent, achieved positive same-store sales growth during the month.
“With the winter winding down, we should begin to see the true trend in consumer spending,” said Joel Naroff, president of Naroff Economic Advisors and TDn2K economist. “Right now, consumption is decent but not great. Government figures for January restaurant sales were down, the first negative month in two years. Since both declines were January sales figures, we need to look past any temporary factors and ask the question: Can household spending hold up? If you look at the income data, wages and salaries are rising at an accelerating pace. Job growth so far this year has been much stronger than anticipated. With confidence in good shape despite the issues in the stock markets, it appears that consumer demand for all types of goods and services should start rising with the better weather. The expectation is that we will see a rebound in the March numbers and sales and traffic should be solid the remainder of the year.”