Corporations are spending more at restaurants as business travel continues to increase.
U.S. companies spent 5.6 percent more in restaurants in 2014 than they did in 2013, according to a new report from Atlanta-based Dinova LLC, a network that connects businesses with restaurants. Restaurant traffic from corporations increased 3.6 percent last year.
Much like the broader restaurant market, where sales accelerated at the end of the year, business travel spending picked up, too. According to Dinova, spending by companies increased 9 percent in December, including 6-percent transaction growth. By comparison, same-store sales at restaurants increased 3.1 percent in December, according to the monthly tracking survey from Black Box Intelligence.
“Looking [at] 2014, corporate dining helped keep restaurants afloat during the weather-challenged first quarter, and consistently delivered steady business as the economy improved and more companies put travelers on the road,” Dinova founder and CEO Vic Macchio said in a statement. “Corporate dining, at its base, is steady and stable, and restaurants with access to corporate event planners and travel managers enjoy a less volatile planning environment. These restaurants are less susceptible to the economic damage that can be done by weather-related events or energy issues.”
U.S. business travel was expected to reach a record $292.2 billion in 2014, according to the Global Business Travel Association, and is forecasted to reach another record in 2015, $310.2 billion. According to the hospitality research firm STR Global, occupancy at U.S. hotels rose 3.6 percent last year, an indication of high travel demand, in particular by business travelers.
Growing business travel has been a boon to restaurant chains, particularly more upscale brands that host business dinners.
Ruth’s Chris Steak House reported 5-percent same-store sales growth in the fourth quarter last year. Kona Grill, the Scottsdale, Ariz.-based concept, reported sales growth of 3.1 percent during its fourth quarter. Del Frisco’s Double Eagle Steak House said its same-store sales in the period rose 4.8 percent.
Corporate travel plunged in 2009 as businesses cut back drastically on travel during the recession — some higher-end steak chains saw sales plunge up to 20 percent some quarters. But it has come back in a major way in recent years as businesses send people on conferences and sales calls.
“All of these road warriors need to eat, whether it be a quick breakfast on the go or a private dining event for clients,” Macchio said.
Spending at restaurants reached something of a zenith in January, when Shane Smith, CEO of Vice Media Inc., reportedly spent $300,000 for dinner and drinks at Prime Steakhouse at the Bellagio Hotel during the Consumer Electronics Show.
“$300,000 for dinner at Prime. That’s a pretty good check,” James Joseph Murren, CEO of Bellagio owner MGM Resorts International, said during the company’s earnings call last month. “And we haven’t seen that in a long time.”
Contact Jonathan Maze at [email protected].
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