Restaurant industry same-store sales rose 4.3 percent in June, according to the latest MillerPulse survey, released Tuesday, as restaurants closed out a strong first half of 2015.
Sales during the month accelerated 70 basis points from the 3.6 percent growth in May, and improved at the highest level since January.
Same-store sales improved for both quick-service restaurants and casual-dining concepts, and traffic increased for the industry as a whole, according to the monthly survey.
“Business is in a very healthy position right now,” said Larry Miller, cofounder of the MillerPulse survey. “It was a strong quarter and a strong first half of the year.”
The housing market has improved, gas prices remain low, consumer confidence is high and the economy continues to add jobs. All of those factors are correlated with strong sales that could continue, Miller said.
“You’ve got a pretty good scenario for sales in the back half of the year,” he said.
Casual-dining concepts narrowed their traditional gap with quick-service restaurants.
Same-store sales at quick-service restaurants rose 3.7 percent in June. For casual-dining concepts, same-store sales rose 3.2 percent. The 0.5-percent gap was the thinnest difference between the two sectors in four years.
“Sales growth is reasonably solid and improving, while QSRs are moderating a bit from high levels,” Miller said.
But casual-dining traffic remains relatively weak, falling 0.3 percent, the fifth straight month of declines, although still an improvement from May, when traffic fell 1.1 percent. Casual-dining consumers are spending more due to price increases and fewer discounts, but are dining out less often.
Quick-service traffic, however, rose 0.7 percent, an improvement over 0.1-percent growth in May. Overall traffic, which includes other segments like upscale concepts that are not broken out, rose 0.9 percent.
“Overall, both segments are doing quite well right now,” Miller said.
The current environment is different than it was the last time sales rose significantly in the industry, in late 2011 and early 2012, he noted. That improvement was driven entirely by improvement in quick service, while the growth in June was broad-based.
“You’re seeing both moving higher,” Miller said.
The improvement positions the industry for higher profits in the second half of the year. Commodity prices are easing and sales growth can translate into easier profits.
But it may still be difficult for the industry to maintain the current level of sales growth, Miller noted. Comparisons get tougher each month through the second half of the year, which will be difficult for restaurants to see accelerating same-store sales.
Indeed, the outlook for same-store sales growth is as weak as it has been in years. Only 12 percent of operators said they thought same-store sales would improve, including just 5 percent of quick-service operators. The outlook for improving sales has been declining for months.
Miller noted that restaurant owners wouldn’t have as much pricing power in the second half of the year after raising menu prices frequently in recent quarters. But he also suggested that the low outlook might be a symptom of the industry’s current strong conditions.
“We had a number of people on the survey say, ‘We’re on fire,’” Miller said. “If you’re on fire now, what’s the next level, volcanic? It’s like being No. 1. You have nowhere to go but down.”
“It’s not a vote of a lack of confidence in the business,” he noted.
Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze
