The restaurant industry did not get off to a good start in 2017, according to the latest MillerPulse survey
“The first quarter was the worst quarter in seven years,” said Larry Miller, co-founder of the survey.
Same-store sales fell 0.4 percent in March, the fourth straight decline and the ninth decline in the past 10 months. Traffic declined 2.5 percent, the 13th straight monthly drop.
But there are some bright spots as the industry looks to recover from what has been the worst period since the recession.
The 0.4-percent decline in same-store sales was a considerable improvement from the 2.6-percent decline in February and the 1.3-percent decline in January. The 2.5-percent decline in traffic was the best result since November.
On a two-year basis, same-store sales increased 0.7 percent, the best result since November and the first time since that metric was positive.
“It was a better month,” Miller said. “It’s good to see things turn up. But it doesn’t make us confident we’ve past the difficult part yet.”
“It’s not all bad,” he added, “but it’s far from good.”
Same-store sales have been slowing since 2015 due to several factors: Competition from other industries, like convenience stores for prepared-food sales; lower grocery prices; overaggressive new unit construction; and general economic malaise despite low unemployment and rising wages.
The downturn has been broadly based, affecting everyone from casual-dining chains to high-growth fast-casual concepts.
Same-store sales were negative for both casual dining, down 0.5 percent in March, and quick service, down 0.4 percent.
Traffic also fell in both segments. Quick-service traffic declined 2.2 percent in March, and casual-dining traffic dropped 2.7 percent.
Traffic remains the biggest issue, as many operators have offset traffic declines with higher prices. While the 2.5-percent drop in traffic was better than in the previous three months, it continued a long string of declines: Traffic has been negative in every month except three in the past 26 months.
The bad start could make it difficult for the industry to come out of 2017 with a positive same-store sales year, which would be the first time that has happened since 2009.
“We’re still looking at a negative year for same-store sales for the industry,” Miller said.
That’s possible: Comparisons will get easier in the spring, especially in June, when same-store sales a year ago turned negative and stayed there.
To come out flat, same-store sales would have to average 1.5-percent growth for each of the next three quarters, Miller said. Besides last February, which was aided by the leap year, the industry hasn’t generated more than 1.5-percent same-store sales growth in a month since late summer 2015.
For the industry to finish 2017 with normal 2-percent growth, it would have to finish the year averaging 2.5-percent same-store sales increases in the final three quarters.
“Things should turn up,” Miller said. “Mathematically, they should. If they don’t, then things are getting worse.”
Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze
