It’s been the restaurant story for some time: Sales momentum, but driven by increases in guest check not same-store traffic. Is that a short-term fix headed for a reality check?

TDn2K’s latest Restaurant Industry Snapshot showed another month of rollercoaster sales and traffic. Sales rebounded 1.6 percentage points in May after a lackluster April. You can thank the absence of external factors, like seasonal storms or holidays, for the month-to-month boost. May’s 1.1 percent growth, however, was joined by same-store traffic declines of 2.1 percent. While this marked a 1.5 percentage jump from April’s growth rate, it’s far from where restaurants would like to be, TDn2K said.


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Still, May was a bright spot. “As we expected, May ratified that the relative strength continues for restaurants when it comes to sales momentum,” said Victor Fernandez, vice president of insights and knowledge for TDn2K, in a statement. “What is even more encouraging for the industry was that in a month relatively free of external factors, such as winter storms and holiday shifts which have muddied the results in recent months, restaurants were able to post some encouraging sales growth.”

It’s also worth noting that sales growth during May was positive compared with the same month two years ago. Two-year same-store sales growth has been positive during seven of the last eight months. The exception was weather-plagued February.

“This longer-term recovery is welcome news for an industry struggling with market oversaturation and increased competition,” TDn2K said.

What it also suggests is that restaurants are finding alternative channels to boost sales despite muted traffic, at least compared to a few years ago. For most chains, this is coming through off-premises pathways, whether it’s to-go, delivery, catering, and other ways to capture share of a growing at-home segment.

The other element is the check note, which suggests less opportunity and more concern moving forward. As TDn2K says, “there are some concerns on the macroeconomic horizon that could put a halt to this momentum.”

So this shift, where guests are willing to spend more than they used to at restaurants, is it fast approaching a ceiling?

“After growing strongly for nearly a year, the economy has entered a period of significant uncertainty, created by the escalation of the use of tariffs to include not just China, but also Mexico,” said Joel Naroff, president of Naroff Economic Advisors and TDn2K economist. “Our two largest trading partners are being pressured and that affects business and consumer costs. But the issues are not limited to trade. Business fears of a tariff-induced slowdown are restraining capital investment.”

Naroff said consumer-spending growth has suddenly become inconsistent. Wage gains are moderating. And while job increases have upped steadily, they could be waning as well.

“Despite these factors, the economy is not faltering. There is, though, less certainty that growth will be sustained at the strong levels seen recently,” he said. “Indeed, the outlook is for the expansion to continue at a more modest pace. That should be enough to keep consumers spending, but again, not nearly as solidly as we have experienced this year—unless the trade uncertainties are resolved quickly.”

As always, staffing remains an alert-button worry. The current period of sustained job growth and low unemployment resulted in record high turnover rates across the industry. High demand for workers is igniting wage pressures—a further strain on labor-intensive and low-margin business. Restaurants are smack in the center of that equation.

According to the People Report Workforce Index, a quarterly barometer of market pressures on employment in the restaurant industry, more than half of restaurant companies reported an increase in difficulty recruiting qualified employees in recent months.

Vacancies also continue to be an issue, particularly at the hourly levels. TDn2K added there are have rising reports of locations closing due to the inability to adequately staff their locations.

If some restaurants are closing because they can’t staff units, how difficult is it to win with fully staffed locations? The answer: Very.

But despite the challenges, there’s reward in the effort. Brands in the top quartile of sales growth performance typically achieved positive traffic growth. TDn2K research showed growing guest counts is possible, but it comes from a combination of staffing for consistent execution, a superior service experience at all levels, attention to detail and activating growth engines beyond traditional dine-in sales during lunch or dinner.

Here’s a look inside the issue:

The top-performing brands

  • Comp sales: 3.3 percent
  • Management turnover versus segment: negative 4 percent

The rest

  • Comp sales: Negative 1.1 percent
  • Management turnover versus segment: 6 percent

The gap

  • Comp sales: Plus 4.4 percent
  • Management turnover versus segment: Negative 10 percent.

Clearly, and it’s no surprise, being fully staffed is a recipe to beating competitors. Getting there is the complicated part.

“This requires an investment in winning the staffing challenges for great talent, retention of the best general managers and a culture of collaboration and genuinely caring about the balance of the employee, the guest and all stakeholders. That is how best-in-class brands drive positive traffic. The employees want to come to work, the guests want to come back and investors want to invest for growth,” said Wallace Doolin co-founder and chairman of TDn2K, in a statement.

By market, the Mountain Plains was the strongest region in May, posting same-store sales growth of 3.3 percent. Florida was the weakest, with negative comps of 1.1 percent and traffic in the red at 3.6 percent.

Overall, 78 percent of the DMAs tracked by Black Box recorded positive same-store sales growth. That was a vast improvement from April, when only 43 percent were able to do so.

Employee Management, Finance, Story