December 07, 2017
The positive momentum in restaurant sales continued into November as the industry slowly recovers from disappointing third quarter results. Same-store sales remained flat year over year for the month. While not on par with October’s 0.9 percent growth, November was considerably better than the average -1.6 percent sales decline over the first nine months of the year. Operators and observers are cautiously optimistic that the industry is beginning to show some signs of strength after struggling for almost two years. These insights come from TDn2K™ data through The Restaurant Industry Snapshot™ based on weekly sales from 30,000 restaurant units, 170+ brands and representing $68+ billion dollars in annual revenue.
“Our concern is that these improved trends come despite the fact that the industry has not cracked the code on declining guest visits,” commented Victor Fernandez, executive director of insights and knowledge for TDn2K. “Brands have come to rely on rising checks to overcome the steady loss of traffic.” Same-store traffic dipped -2.5 percent in November, a 0.9 percentage point drop from October. It’s been almost three years since restaurants experienced a month of positive guest counts.
The Economy Continues to Pick Up Steam
“While the negative impacts of the hurricanes were not great, the rebuilding and replacement of losses have hyped growth. Job gains are strong, though wage increases continue to lag. Consumers’ confidence is high and as a result they are willing to cut into savings in order to maintain their standard of living. While that is supporting growth now, it could create spending issues next year” stated Joel Naroff, president of Naroff Economic Advisors and TDn2K economist.
“As for the tax bill,” continued Narorff, “the impacts on the restaurant industry could vary greatly. Lower and lower middle-income households benefit modestly, middle income households a little more and upper income households a lot. Thus, additional spending on eating out will depend upon the income level of the restaurant’s clientele. It should not be assumed that all restaurant chains will benefit significantly from the tax cuts.”
Guest Check Growth Continues to Accelerate
Despite many brands focusing on price…