Restaurant industry same-store sales fell 1.5 percent in January, the seventh decrease in the past eight months, as consumers continued to seek other options for their dining, according to the latest MillerPulse restaurant index.
The weakness continued to be evenly spread across all sectors and was largely the result of weak traffic.
Same-store traffic fell 2.9 percent in the month. That was an improvement from the 4 percent decline in December, but still poor enough results to be the second worst month for traffic since at least 2010.
“These are still very bad results,” said Larry Miller, cofounder of the survey. “Things got better. But they got better off of a horrific December. The trend is and has been down.”
The industry has struggled for much of the past year.
Analysts and industry observers have made suggestions as to why have ranged widely: Consumers are shifting spending to other items like cars; prices at the grocery store have been falling and so people are eating in more often; the economy is headed toward an inevitable recession, the analysts have suggested.
Yet it’s clear that restaurants are facing their biggest challenge in the post-recession era. Same-store traffic has fallen for 15 of the past 16 months and the only month with positive traffic was last February — when restaurants got a sales boost thanks to an extra day.
And matters appear to be getting worse. On a two-year basis, same-store sales were down 0.6 percent, the worst result in the post-recessionary era.
The challenges are coming despite low unemployment and low inflation and a stock market surging since the election of President Donald Trump. So while the industry has often been considered a leading indicator of a recession, it might not be the case now.
“Restaurants have their own set of problems,” Miller said. “It’s not necessarily the indicator it once was of the general economy.”
The industry challenges are across sectors. Quick-service same-store sales in January fell 1.3 percent, while traffic for the sector declined 2.4 percent. The same-store sales number was worse than December, but traffic improved slightly from the month, suggesting that quick-serves are focusing on price to get customers.
Casual dining same-store sales fell 1.7 percent, an improvement from the 3.8 percent decline in December. Traffic fell 3.6 percent, up from a 4.9 percent decline in December. Despite the sequential improvement, both numbers were still historically low.
And the results continued the steady erosion of casual dining traffic, which has fallen nearly every month since at least 2012.
There is some belief among industry observers that restaurant same-store sales and traffic should improve as the year goes on, given easier comparisons; same-store sales peaked in February, turned negative in June and generally weakened as the year progressed.
Operators themselves have been more optimistic that policies could provide relief on regulations and labor costs while providing the potential for tax relief that could stimulate sales.
Yet, Miller said, “It’s really challenging to forecast anything but a negative year.”
Contact Jonathan Maze at [email protected]
Follow him on Twitter at @jonathanmaze
