Black Box Intelligence has reported on restaurant sales and traffic since the Great Recession. But these last few weeks are something far beyond anything the industry has experienced, Victor Fernandez, VP of insights, said.

Just the back half of March alone was enough to push the sector down to its worst month in decades. Same-store sales for restaurants dropped 28.3 percent in March, the company said.

And, truthfully, the figure doesn’t capture the full picture. In the past two weeks, comps have declined north of 65 percent.

But there might a silver lining. “Although it is hard to classify anything as good news right now, there is a positive in the sense that the decline in sales may have reached bottom based on early April data,” Fernandez said in a statement. “As more restaurants focus their undivided attention on their off-premises offerings and guests adapt their consumption to this new environment, plus some of the government relief measures take effect, some small improvements may lie ahead.”

Same-store traffic plummeted 29.2 percent in March. Similar to sales, however, it wasn’t until the final 14 days that traffic was severely impacted by the measures imposed to try to slow COVID-19. As normal routines for work, school, and other activities were disrupted by social distancing and stay-at-home mandates, restaurant guest counts fell close to 70 percent in comparable stores during the end of March.




Every market tracked by Black Box posted negative sales. All 198 of them. The strongest region was the Southeast, which still witnessed March sales declines of 23.45 percent. Traffic plunged 24.85 percent.

New England, understandably, was the worst, with sales down 32.50 percent and traffic 33.11 percent.

Regions with large metropolitan areas with high population density were hit the hardest. During the final week of the month, the Southeast was the only region that experienced less than a 60 percent decline in year-over-year restaurant sales.

By the final week of March, sales declines and large outbreaks showed a direct correlation. Same-store sales dropped by more than 70 percent for New England, the Western Region, New York-New Jersey, the Mid-Atlantic, and California.

For the month, average guest checks grew about 2.4 percent, year-over-year. Again, this is something best looked at in a two-week window. By the end of March, guest check growth became essentially flat, year-over-year.

The real story, Black Box side, was the widening check growth dynamics between segments. Quick-service brands experienced a sharp acceleration in their guest check growth. This was likely due to consumers shifting to larger off-premises orders to feed multiple people at home, and to make orders last.

Meanwhile, guest checks decreased precipitously for full-service restaurants—something you can credit to beverage sales being almost completely eliminated by the pivot to takeout and delivery. Alcoholic beverages, in particular, serve as the financial lifeblood for many sit-down restaurants, especially those in the bar and grill and more upscale segments.

Fine dining and upscale casual were the worst performing categories in March based on same-store sales growth. Family dining was another area hit hard—a group that includes many buffet-based concepts.

With restaurant operations shifting to off-premises-only models, concepts that were developed with these channels as an essential part of their business are faring much better. Quick service and fast casual were the best performing segments. Full-service restaurants experienced comps declines of more than 70 percent, year-over-year, by the final week of the month. Fast casual’s drop was about 50 percent, while quick service lost “only” 30 percent of its sales during the week.

A survey by Black Box, conducted in early April, found that 22 percent of participating restaurant companies had to lay off employees. Close to 70 percent (67) said they had to place some on furlough.

Currently, 67 percent of restaurants said they offer paid sick leave to their hourly employees. The number is higher for managers. “Taking care of employees has gone beyond those still working at those restaurants in many cases. Half the companies surveyed said they are extending health benefits for an average 8 weeks for those employees that have had to be laid off or furloughed,” Black Box said.

COVID-19 hurt all dayparts. As the pandemic effects started to spread in Mach it seemed, at least initially, Black Box said, that breakfast and mid-afternoon sales would hold up better than the rest. However, by the final week, breakfast sales growth fell in line with the declines being reported at lunch and dinner.

Black Box said breakfast comp sales plunged 80 percent in the week ending March 27, which represented a 19-percentage point drop in performance from the previous week.

To date, mid-afternoon sales remain the best performing daypart based on same-store sales growth, while late-night business has been the most negatively affected since early in the crisis.

Pizza concepts, following a steady trend, continue to hold up the best by segment, down just 15 percent in comp sales, followed by chicken and hamburger (negative 30 and 32 percent, respectively). Performance across all cuisine types varies widely, with bottom performers within the breakfast-centric concepts and bar and grill sector declining 83 and 74 percent apiece.

Joel Naroff, president of Naroff Economic Advisors and Black Box economist, said the economy’s recovery will likely be slow after a strong initial rebound.

From a macro economic standpoint, there are two major questions facing restaurants: When will the economy start to reopen and what will the recovery look like? “The answer to the first question is unknown,” Naroff said in a statement. “As for the second, it is critical to understand that the programs put in place are stabilization plans not stimulus plans. You have to stop falling before you can start rising again. When the opening does occur, the early phase should be very strong. Given the massive number of business closures, their reopening will create a huge rise in activity. Also, households will have to restock, creating a temporary surge in consumer demand.”

“But that could be a head fake,” he added. “We need to look not at the first few months after reopening but the following six to twelve. That is when economic fundamentals take over. With so much damage to so many companies, it is likely that even with government financial support, many will fail, slowing activity. In addition, it is unclear how consumers will behave. The unemployment rate could hit 20% and it might take years to get back to a more normal level. After the initial surge, it may be months before a sustained consumer spending pattern emerges. A second, short down phase could take hold. At that point, we would likely enter the true recovery. Given all that happened, growth at moderate rates, similar to the recovery period in the 2010s, should be expected.”

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