Restaurant chain same-store sales rose 2.9 percent on average in August, marking the sixth month of gains in the past eight months. However, industry traffic remained lackluster, according to the latest NRN–MillerPulse report.
The August results were an improvement over the 2.5-percent increase reported in July. On a two-year basis, August average same-store sales rose 4.1 percent, compared with July’s two-year average of 3.3 percent.
“Sales trends have been consistent and strong across the industry over the past eight to nine weeks, which bodes well for the future,” said Larry Miller, founder of the monthly MillerPulse report. “The one thing gating our enthusiasm as we head into the home stretch of 2014 is traffic.”
Industrywide guest traffic increased a meager 0.1 percent in August, the best result since November 2012, but disappointing considering the easier comparisons, Miller said.
Guest counts improved for casual dining, declining 0.4 percent, compared with a 1.1-percent decrease in July. But quick service reported weaker traffic, falling 0.3 percent, compared with a 0.1-percent decrease in July.
As a result, Miller trimmed the forecast for the rest of the year, projecting that traffic would be flat and same-store sales would rise 2.4 percent. For the full year, Miller estimates same-store sales will increase 1.9 percent, but traffic will decline 0.6 percent industrywide.
Looking at same-store sales on a weighted basis, in which larger chains factor more heavily, same-store sales fell 0.3 percent in August, indicating that larger chains are faring worse than the average — particularly burger chains.
McDonald’s Corp. reported a global same-store sales slide of 3.7-percent in August, its worst monthly decline in a decade. In the U.S., McDonald’s same-store sales fell 2.8 percent.
Casual dining showed encouraging improvement, outpacing quick service for the first time in three years. However, “one month doesn’t make a trend,” the report said.
Same-store sales for the casual-dining segment rose 2.9 percent, compared with a 2.7-percent increase reported for quick service.
About 55 percent of casual-dining operators said same-store sales improved in August, compared with 18 percent who saw trends worsen.
In addition, casual-dining operators were more optimistic about margins over the next six months. Twenty-five percent of casual-dining players said they expect margin improvements, compared with 18 percent of quick-service operators who expect improvement.
Overall, a net 18 percent of operators expect better margins, meaning 45 percent expect improvement less 26 percent that expect worse.
Operators are also upbeat about sales, the report noted. Fifty percent of surveyed operators said they expect sales to improve in September, while 19 percent said they expect sales to worsen.
So far, however, September is off to a slow start, with sales rising 1.2 percent industrywide in the first week, the report said.
Operators expect commodity inflation to increase 2.8 percent over the next six months, an increase over projections of 2.6 percent in July.
Quick-service operators expect inflation of 2.9 percent, compared with a 2.4-percent increase expected in casual dining.
Operators also expect to raise menu prices. Quick-service players expect to raise prices an average 1.9 percent over the next six months, compared with an average expected increase of 1.4 percent in casual dining.
MillerPulse results are based on a monthly survey of operators averaging more than $40 billion in industry sales, representing all regions of the country and across the quick-service, casual-dining and fine-dining segments. Restaurant chains and operators interested in participating in the MillerPulse survey for additional results and insight can register at the MillerPulse website.
Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout
