“Another noteworthy insight from Q3 is that same-store sales improved by almost twice as much as traffic, which means that a significant part of the improvement in sales during the quarter came from an increase in average guest checks,” said Wally Doolin
(PRWEB) October 10, 2014
As the economy continued showing signs of relative strength, the restaurant industry posted its best sales results in over two years during Q3 2014. Same-store sales growth rate during the quarter were 1.6%, a healthy 1.3% increase over the second quarter’s results and the best quarter for the industry since Q1 of 2012. The industry achieved positive same-store sales for the second consecutive quarter; a first since the second half of 2012. This strong result for the quarter came at the heels of a very strong performance for the industry in September, which posted a very robust 2.2% growth rate for same-store sales.
September performance resulted in the second consecutive month of growth surpassing the 2.0% mark and the best month for the industry since February of 2012. This also represents the third consecutive month in which year-over-year same-store sales have increased compared to the previous month. Although same-store restaurant traffic also improved considerably during the quarter, we have not yet seen a quarter of positive year-over-year guest count growth since the recession. This highlights one of the biggest challenges faced by the chain restaurant industry today. This insight comes from data reported by TDn2K’s Black Box Intelligence through The Restaurant Industry Snapshot for September, based on weekly sales from over 20,000 restaurant units representing over 45 billion dollars in annual revenue.
“The industry is clearly going through its best period over the last couple of years as consumer confidence, real disposable income, the labor market and overall economic growth improved during the third quarter. Meanwhile, gas prices continue to decrease and are farther away from the average $3.50 per gallon; which we’ve seen in the past is the level at which restaurant same-store sales begin to be significantly impacted,” said Victor Fernandez, Executive Director of Insights and Knowledge for TDn2K, parent company of Black Box Intelligence and People Report. “We are optimistic about the fourth quarter, which we believe could result in another quarter of positive sales growth for the industry, especially considering the very soft sales seen during December of last year due mainly to bad weather. The weather could actually be one of the main factors that will determine the industry’s performance during the next two quarters. As long as the winter is not worse than last year’s, the industry should be facing some very favorable sales comparisons and posting some strong growth rates”, continued Fernandez.
Same-store traffic growth was -0.2% during September, which represents a 0.3% improvement over August and the closest the industry has been to achieving positive same-store traffic growth in the last ten months. The rollup for the quarter resulted in same-store traffic growth of -0.7% for Q3 2014, an improvement of 0.7% from the previous quarter and the best restaurant traffic results since Q1 2012.
“Another noteworthy insight from Q3 is that same-store sales improved by almost twice as much as traffic, which means that a significant part of the improvement in sales during the quarter came from an increase in average guest checks,” said Wally Doolin, Chairman of TDn2K. “Of course this increase can be a reflection of price increases, a change in product mix, or a combination of both. We believe it is more related to a shift in mix during this time of the year”.
The relative strength of the industry’s results was demonstrated by the widespread improvement of sales across most of the regions of the country during Q3 2014. Of the eleven regions tracked by Black Box Intelligence, six posted same-store sales growth of 2.0% or above while only the New York-New Jersey saw sales decline during the quarter. The best performing region was Florida with same-store sales growth of 2.8%, while New York-New Jersey’s sales of -0.2% were the worst during the quarter.
From a workforce perspective, restaurant recruiting and retention continues to become increasingly difficult. The industry as tracked by People Report created 4.3% new jobs during August 2014 when compared with the same month the previous year; representing the third consecutive month with annual job growth around the 4.0% mark. As an increasing number of restaurants need to be staffed, retention also continues to be an issue as both restaurant manager and hourly employee turnover continued its upward trend during August. Expectations are for these staffing difficulties to continue during the fourth quarter and into 2015.