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.
The Restaurant Industry Snapshot for June, released this week by Black Box Intelligence and People Report, reveals a disappointing second quarter for the industry that can no longer be attributed to the weather.
Same-store sales rose 0.3 percent during the second quarter of 2014, a 0.5-percent improvement over the first-quarter results, which were dramatically affected by the extreme winter weather.
“However, even without the weather-related constraints, same-store sales growth for the quarter was pretty lackluster,” said Victor Fernandez, executive director of insights and knowledge for TDn2K, parent company of Black Box Intelligence and People Report.
Industry observers expect a stronger second half of the year in terms of same-store sales growth, considering that same-store sales were negative during both the third and fourth quarters of last year, creating lower hurdles in 2014.
However, considering the mid-year performance of a meager .06-percent rise in comparable sales, observers ask whether the industry will get the rollover benefit. On a two-year basis, same-store sales grew by about 1.2 percent during the second quarter, while guest checks have grown at an average of 2.1 percent for all months during this same two-year period.
“The sales growth we are observing is not reflecting the full price increase amounts that brands have likely taken during the last two years, given the growth in average check”, Fernandez said. “The barrier continues to be the declining guest counts experienced by the industry.”
Same-store traffic, which fell once again, by 1.4 percent, during the second quarter, was still the strongest result for the industry since the second quarter of 2013. The industry has yet to post a quarter of positive same-store traffic since the recent recession. On a two-year basis, same-store traffic dropped by 2.7 percent, compared with the second quarter of 2012, further illustrating the chain restaurant industry’s main problem.
“Underlying this data is an environment that combines slow-moving improvements in the labor market, changing preferences among consumers who seem to be more interested in options beyond the traditional restaurant chains and — perhaps most importantly — disposable personal incomes that are not growing at a pace that allows for much spending growth on restaurants,” Fernandez said.
According to the latest Restaurant Industry Willingness to Spend Index, published by Consumer Edge Research, consumers’ expectations dropped during June and point towards decreased spending in restaurants in the coming month.
Analyzing sales at the regional level uncovers another sign of weakness for the industry. Although sales grew at the national level, same-store sales declined in five of the 11 regions tracked by Black Box Intelligence during the second quarter. The strongest region according to same-store sales growth was Mountain Plains, which rose 1.9 percent, while New York-New Jersey’s sales 1.6-percent decrease classified the region as the worst in the country for the second consecutive quarter. Again, the numbers can no longer be attributed to winter storms.
The restaurant industry continues to add jobs, as reflected by People Report’s latest findings. Job growth for May rose 3.5 percent year-over-year, representing the seventh consecutive month of restaurant jobs growth of more than 3.0 percent.
Unfortunately, turnover for both restaurant managers and hourly employees also continues to tick upwards. Restaurant human resources professionals, as tracked in the People Report Workforce Index, see increasing employment pressures in the form of rising vacancies and recruiting difficulties in the third quarter, signaling a long, hot summer for restaurateurs.
The Restaurant Industry Snapshot is a compilation of real sales and traffic results from more than 185 DMAs from 110+ restaurant brands and more than 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 more than 30,000 restaurant units, one million employees and $45 billion 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.