TDn2K’s latest industry snapshot returned a promising figure—same-store sales growth of 1.8 percent in August, which marked the highest growth rate since September 2015. However, this is one report worth keeping in perspective. The results lap the first week of Hurricane Harvey’s devastating affect in 2017, when comps plummeted 15 percent in Texas the week the storm hit. The Lone Star State’s performance trimmed the national sales result by more than a percentage point in the final week and 0.3 percentage points for the entire month, sagging the overall number to negative 2 percent and negative traffic of 3.9 percent. Against the performance, same-store sales this August increased 2.9 percent for the last week.

Yet, even so, TDn2K’s data reflected an optimistic turn for restaurants. In the first three weeks of the month—before the hurricane drove down sales—figures showed that August would “probably have been one of the best [if not the best] in over two years even without the boost from the easy comparison,” the report said.

Same-store traffic growth dropped 0.6 percent in August and is down 1.22 percent in the rolling three months. Comps sales are up 1.15 percent in the same period.

“Regardless of the hurricane impact, It is important to highlight that sales were strong in August,” said Victor Fernandez, vice president of insights and knowledge for TDn2K, in a statement. “At the end of July there was concern that restaurant sales might be slowing and the much-awaited recovery might be coming to an end. Nonetheless, sales in the first three weeks of August, which were pre-hurricane, were up 1.5 percent. Had this been the final result for the month, it would still have been the best performance since September of 2015 and it represented a 0.9 percentage point improvement over July’s same-store sales.”

Positive sales spread evenly across the country in August. Eleven regions posted positive comps growth, offering more proof that the month’s strong performance wasn’t strictly in response to 2017’s tumble. Naturally, though, Texas showed the largest year-over-year growth at 4.1 percent. Overall, at the market level, 143, or 73 percent, of the 196 designated market areas tracked by Black Box Intelligence achieved positive same-store sales growth in August. In July, only 61 percent could make the claim.

The weakest region was the Southwest. Sales crawled 0.65 percent and traffic declined 1.71 percent.

On the labor front, TDn2K’s People Report reflected some relief in July in regards to declining turnover rates for restaurant managers and hourly employees. Its latest Workforce Index reported that 74 percent of brands experienced increased recruiting difficulty for hourly employees during the last quarter. Also, 59 percent said recruiting for managers is becoming more difficult. “A factor behind this increased recruiting difficulty is that the industry continues to expand. The number of chain restaurant jobs has increased by 1.7 percent year over year during the last two months,” TDn2K said.

The national unemployment rate is averaging 3.9 percent over the last four months. Twenty states reported unemployment of 3.6 percent or less in July.

“In addition to retention issues, restaurants are dealing with their own expansion and what it means for their recruiting efforts,” the report said.

The Workforce Index revealed that 43 percent of restaurant brands expect to add management staff during the third quarter, and 49 percent plan to increase their hourly staff.

“Considering the close relationship that exists between employee retention and guest sentiment particularly based on service [as measured by White Box Social Intelligence] this is cause for cautious optimism going forward,” TD2nK said. “Furthermore, research reveals that top performing brands in sales and traffic [as measured by Black Box Intelligence] are already ahead of the curve in people practices that enable best in class retention and guest satisfaction.”

Joel Naroff, president of Naroff Economic Advisors and TDn2K economist, added that consumer spending could start to moderate.

“There are few signs that the economic upsurge will slow sharply anytime soon,” he said. “Manufacturing activity is strong and businesses are starting to spend their soaring after-tax profits. The measured wage gains remain modest, but that does not mean employees aren’t doing better. Firms are increasing compensation by raising benefits, whether they are health care, retirement or non-traditional perks. That is helping firms capable of paying the higher compensation costs to attract workers. However, these limited wage gains represent a problem for consumer-related businesses. With job growth limited by the lack of workers, total income increases are not expected to accelerate significantly and while demand has increased recently for these businesses, growth is likely to moderate over the next six months.”

Finance, Story