The combination of bad winter weather, a late Thanksgiving and a shorter holiday shopping season caused a 0.2-percent dip in restaurant industry same-store sales and a 2.6-percent decline in guest traffic in December, according to the latest NRN-MillerPulse survey.

Ending the year on a downbeat note, the results marked the second month comparable-store sales were negative in nearly three years. Same-store sales also fell in February 2013 by 1.8 percent, which then was the first time industrywide same-store sales had been negative since February 2010.

For the full year, same-store sales rose 1.1 percent overall, but 2013 marked the worst year since 2009, when same-store sales fell 4 percent.


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“The question we’re struggling with is why 2013 is so poor, when most economic and wealth measures improved,” said Larry Miller, founder and chief executive of the monthly MillerPulse report. “It tends to point to more structural issues.”

With easier comparisons and improving macroeconomic factors as a tailwind going into the new year, Miller projected a modest 2-percent increase in industry-wide same-store sales for 2014.

Still, that forecast depends on the assumption of a strong first quarter for fiscal 2014, predicted to rise 3.2 percent, said Miller.

“If the first quarter is weaker than expected, we could be in for another disappointing year,” he said.



Trends in casual dining were largely to blame for the same-store sales slippage in December. The segment recorded a 2.2-percent decline in same-store sales, which followed a more modest decline of 0.3 percent in November. Casual-dining traffic in December dropped a “whopping” 3.9 percent, more than any other segment, the report said.

Meanwhile, same-store sales rose 1.1 percent for the fast-food segment, with traffic falling 1.8 percent. Fast-casual restaurants saw same-store sales increase 1 percent despite a traffic decline of 1.6 percent.

Together, the fast-food/fast-casual segments outperformed casual dining for the 29th time in the last 30 months. Fine dining recorded a same-store sales decline of 1 percent with a traffic decline of 3.6 percent, coming close to the slide seen in casual dining.

Despite the bitter cold weather across much of the country in January, operators surveyed for the MillerPulse report said sales were improving in early January.



Overall, operators were optimistic that sales would pick up in 2014, predicting a 3.1-percent rise in same-store sales this year, including a 3.6-percent increase in the quick-service segment, followed by fine dining, projected to rise 3 percent. Casual-dining sales will rise 2.8 percent in 2014, the operators projected, followed by fast casual at 2.5 percent.

Miller, however, sees the operator projections as overly optimistic, given macro factors were improving in 2013 but sales performance was still disappointing.

The recovery seems to be having a barbell effect, benefiting restaurants on the low end and high end, while those in the middle — including casual dining — are lagging, Miller said.

“Is it something about this economic recovery? Is it not broad enough or strong enough?” he said. “We’re seeing more lower-income jobs, but not much that benefits consumers with more average incomes.”

Miller posed that a “price-value problem” may also be to blame, or that the fast-casual segment is stealing even more market share from casual dining than previously thought.

Among operators surveyed for the report, 76 percent in the full-service sectors said their sales slowed in December, compared with only 14 percent who saw sales improve.

Restaurant margins in December rose 15.1 percent for the industry, increasing 1.6 percent, or 160 basis points, compared to November. Margins were running at 31 percent for food, 28 percent for labor and 26 percent for operations.

Though commodity inflation declined significantly throughout 2013, operators said they expect to see such food costs increase 1.6 percent in the next six months, compared with projections of 1.4 percent among operators surveyed in November. Seafood and beef — including steak and ground beef — are expected to be to blame.

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