Softer sales trends in January among quick-service restaurants appear to indicate a more lingering weakness, even after adjusting for the impact of bad weather, according to the most recent NRN-MillerPulse survey.

The quick-service segment overall has held up well over the past three years and continued to outperform casual dining in January. Fast-food restaurants recorded a same-store sales increase of 1.6 percent, while both fast-casual and casual-dining restaurants recorded a decline of 0.9 percent, respectively. Industrywide, same-store sales were flat for the month.

On a two-year basis, however, quick-service sales rose only 2.2 percent, the weakest results since July 2011, the report found.

Larry Miller, founder and chief executive of the monthly MillerPulse report, estimates that winter weather hurt sales by about 1.5 percent in January, based on operator commentary. After adjusting for weather, however, the quick-service results are still the weakest in three years.

“That, and the fact that weather is neutralizing the easiest comparisons of the year, doesn’t bode well for sales for 2014,” Miller said.

Still, operators are projecting same-store sales growth of 3.4 percent in 2014, according to MillerPulse surveys. They also plan to open new units at an average rate of 3.1 percent, so the combined result would indicate a projected top-line growth of 6.5 percent for the industry.



The fast-casual segment is expecting top-line growth of 14.1 percent, fast food will grow a more modest 5.7 percent, and casual dining will grow 5 percent, the survey indicated.

“This forecast might be on the high side, as industry sales have grown a compound rate of 4.2 percent over the last five years,” Miller said in the report. “Nonetheless, if the operator forecast is accurate, industry sales would approximate $511 billion in 2014, up from $480 billion, comprised of $261 billion in QSR and $250 billion in full service.”

Traffic fell 2.2 percent industrywide in January and was negative across all segments. Fast food reported the least damage, with a decline of 0.5 percent, while fast casual fell 2.8 percent and casual dining declined 3.4 percent.

Not surprisingly, restaurants across all segments fared much better in the West, where the weather was warmer and drier. In sunny California, for example, same-store sales rose 4.3 percent, compared with the 7.1-percent decline in the snow-packed Northeast.



Operators are optimistic sales trends will improve in February as the bad weather season passes. Overall, 52 percent of operators said they expect better sales this month, compared with only 13 percent who said they expect sales trends to worsen.

Over the next six months, operators said they expect commodity inflation to rise 1.9 percent, an increase over the 1.6-percent rise projected in the prior month’s survey. Ground beef and steak are the biggest concerns, though seafood is not far behind. Such commodity pressure, combined with pending minimum wage hikes, is likely to result in menu price increases, the report said.

Quick-service companies said they expect a 2.1-percent menu price increase, while full-service restaurants projected a 2.2-percent increase.

Restaurant chains and operators interested in participating in the MillerPulse survey for additional results and insights can register at MillerPulse.com.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout