Restaurant sales remain pressured

As fourth-quarter earnings season comes to a close and restaurant companies provide outlooks into 2013, warnings on sales softness continues.

Driven by a drop in consumer spending, mainly because of increased payroll taxes and rising gas prices, February sales were challenged, according to restaurant securities analyst Andy Barish at Jefferies Group Inc.

Some companies saw large sales dips in early 2013, while others reported strong endings to 2012 and continued optimism. Companies that remained consistent included AFC Enterprises Inc. and Bloomin’ Brands Inc., while others, like Darden Restaurants Inc. and Yum! Brands Inc.’s China division, struggled to maintain their sales footholds.

“Earnings season is wrapping up and the broad takeaway is that February numbers are weak,” Barish said.“Not only are [comparisons] difficult, but there’s been a drop off in consumer spending trends as guests’ wallets are squeezed by higher payroll taxes, delayed tax refunds and rising gas prices.

“The [comparisons] get easier in March, but the industry is remaining cautious, and many companies tempered their 2013 guidance on soft [first-quarter same-store sales],” he concluded.

POLL: NRN has asked readers how the payroll tax increase has or has not affected restaurant sales. Early results, from more than 70 responses, show 69 percent of respondents said sales have been negatively affected, while 31 percent said the hike had no affect on sales. Take the poll now to track results.

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