Restaurant same-store sales increased 0.6 percent in May, according to MillerPulse, the first monthly improvement in a year.
It was also the first time in 16 months that same-store sales increased at both quick-service restaurant chains and casual-dining concepts. Easier comparisons, and perhaps an improving restaurant environment, appear to be working in the industry’s favor.
“Business improved in the month,” MillerPulse cofounder Larry Miller said. “But sustainability is the question.”
The big surprise came from casual dining, where same-store sales increased 0.8 percent, outpacing quick-service restaurants where same-store sales increased 0.5 percent.
Traffic, however, remains an issue. Overall, traffic fell 1.1 percent, and was down at both quick-service restaurants (down 1.3 percent) and at casual diners (down 0.8 percent).
“There are still problems,” Miller said.
At the same time, however, the traffic performance was the best since March of last year. Traffic has not increased in any month since February of last year, when Leap Day aided traffic that month.
Since March last year, traffic has fallen by 2.3 percent on average, meaning the 1.1 percent represents the first true, sequential improvement in well over a year.
“Things are bottoming, which is good,” Miller said. “This is welcome news.”
Comparisons are indeed easier. Same-store sales were flat a year ago, which at the time was the worst performance for the index in nearly three years.
And comparisons should only ease from here on out. Same-store sales fell as much as 1.7 percent some months during the latter half of 2016. So restaurants should have an easier time generating positive same-store sales.
“There should be modestly positive [same-store sales] the rest of the year,” Miller said. “But it would be nice for them to accelerate back into the 1 to 2 percent range.”
But he also noted that the two-year trend is up — same-store sales increased 0.6 percent in May, an improvement over the 0.5 percent decline in April
That means business improved during the month beyond simple comparisons.
Two issues could be pushing consumers toward restaurants. For one thing, the gap in pricing between restaurants and grocers, which had widened to as much as 450 basis points last year, has narrowed to 250 basis points in May.
The gap is considered to be a factor in weak same-store sales and traffic in the past year and a narrower gap could be giving consumers more reason to dine out. The lower gap could be “helping at the margins,” Miller said.
“Sometimes, we wish for lower food costs, but that turned out to be very detrimental,” Miller said. “And [grocers] are doing a good job with the home meal replacement. They haven’t sat idle over this decade.”
Another factor could be gas prices, which averaged $2.285 per gallon on Tuesday, according to AAA, modestly lower than where they were a month ago, or a year ago.
And Miller said that restaurants have been doing a better job attracting customers recently as they’ve sought to be more competitive. “Restaurants are taking notice,” Miller said. “They’re doing a slightly better job in promotion as well.”
Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze
