Restaurant same-store sales rose 3.3 percent in March, but traffic fell for the second straight month, according to the latest MillerPulse survey.
But operators’ profit outlooks are improving as commodity costs moderate and consumers shift from discounts to purchasing more premium items.
Restaurateurs have been increasingly optimistic about their outlook for margins over the past few months, according to the index. Restaurateurs were much more likely to expect margin improvement in the next six months, according to MillerPulse.
“There’s definitely a theme here,” said Larry Miller, co-founder of the monthly MillerPulse index. “Consumers are buying less on deals. Operators have lower food costs and stable sales. And the cost cutting from years ago has led to stronger profits. That’s a nice story for 2015.”
Still, the lack of traffic growth suggests that total demand for the industry is still not consistently growing despite an improving economy and lower gas prices.
Customer traffic had increased for seven straight months, according to MillerPulse, and by January, when traffic increased 2.7 percent, the industry was said to have turned a corner in its long recovery.
But traffic fell in February and again, by 0.2 percent, in March. Quick-service restaurant traffic fell 0.3 percent in March. Casual-dining traffic fell 1.3 percent.
Some of the decline could be due to poor weather, but comparisons in both February and March were easy, due to severe winter weather a year ago.
“I’m not sure what happened there,” Miller said, noting that each time the industry starts showing traffic growth, it does not last beyond a few months and before traffic falls again.
Still, Miller said that, on a two-year basis, traffic was better in March than it was in February.
“On the surface it looks disappointing, and rightly so,” he said. “But the fact is, comparisons are 100 basis points harder in March. Being flat means you’re still accelerating on a two-year basis.”
The traffic decline at this point remains the only major downfall in a restaurant industry that is enjoying sales and profit growth — and which has otherwise started the year off on solid footing.
The 3.3-percent same-store sales increase was not entirely due to price hikes, which many restaurants took last year because of higher commodity costs. Miller suggested that price mix was a more likely culprit for the increase. Consumers have been less likely to dine out on a deal in recent months, as they’ve gradually weaned themselves from the value-obsessed days of 2009 and 2010.
“Consumers are going away from value,” Miller said.
Quick service once again outperformed casual dining, with same-store sales at quick-service concepts up 3.1 percent and casual dining up 2 percent. Still, sales at casual dining restaurants have been up for 11 straight months.
The same-store sales increase was the third best performance for the index in more than three years, since the winter of 2011-2012, when unseasonably warm weather lured customers to restaurants in droves.
MillerPulse results are based on a monthly survey of operators averaging more than $40 billion in industry sales, representing all regions of the country and across the quick-service, casual-dining and fine-dining segments. Restaurant chains and operators interested in participating in the MillerPulse survey for additional results and insight can register at the MillerPulse website.
Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze
