Industry News | June 10, 2014

Restaurant Sales up for 3rd Consecutive Month

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The spring brought relief for the restaurant industry, which based on the results for May has now posted three consecutive months of positive same-store sales. On a quarter-to-date basis same-store sales are approaching 0.5 percent at the end of May, fueling hope that Q2 2014 could be the first quarter since Q2 of 2013 in which the industry has reported positive same-store sales.

This was reported by TDn2K’s Black Box Intelligence and People Report through The Restaurant Industry Snapshot for May, released this week.

Same-store sales growth for May was 0.3 percent, which represents a decrease of 0.3 percent from the sales growth reported for April.

“Although this slowdown might at first appear discouraging for the industry, it was mostly based on the fact that the comparable month of May 2013 was relatively strong, which resulted in a higher hurdle for May’s sales this year”, says Victor Fernandez, executive director of insights and knowledge for TDn2K, parent company of Black Box Intelligence and People Report. “On a two-year basis, same-store sales improved slightly to about 1.1 percent during May. The message from the industry continues to be that moderate same-store sales growth might be as good as it gets given the current environment. However, positive results are expected for the rest of the year based on the fact that Q2 was the only quarter last year that achieved positive sales growth in comparable stores. The softer comparable sales hurdles for the second half of the year will likely help the numbers look better for the rest of 2014."

Same-store traffic growth was -1.5 percent for May, a 0.3 percent drop from the growth rate reported for April. “Declining guest counts continue to be main issue for restaurant performance, as every quarter since the end of the last recession has posted declining same-store guest counts and Q2 points is heading in the same direction," Fernandez says.

Even if May brought relatively good news based on its positive sales growth, improvements are still small and there are still many challenges at the local level. Out of the more than 180 DMAs tracked by Black Box Intelligence, only 56 percent of them experienced increases in their restaurant same-store sales during the month.

There was no substantial change in the consumer expectations during May according to The Restaurant Willingness to Spend Index published by Consumer Edge Research, which posted a value of 95 for the second consecutive month.

“This index has been stabilized at the highest values it has seen in over three years, again suggesting the idea that the restaurant spending we have seen over the last two months might be as much as can be expected in upcoming months. The key for the industry accelerating its growth will have to come from substantial consumer income growth in order to translate that relatively positive outlook into actual substantial increases in spending, and that seems unlikely in the near future," Fernandez says.

Job growth in restaurants slowed down slightly during April according to People Report’s latest results. After growing at a year-over-year pace of about 3.8 percent during the previous two months, April saw its job growth dip to 3.4 percent. This drop, notwithstanding, the number of jobs offered by the industry has now grown by more than 3.0 percent year-over-year for six consecutive months. Turnover for both restaurant managers and hourly employees continued to creep up during April, adding to the headaches already experienced by the industry in the form of rising labor costs and potential minimum wage increases.

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.