Best Restaurant Industry Sales Growth in Nearly Three Years; Hurricane Harvey a Factor

Theo tin TDn2K hay prweb.com

Restaurant Same-store sales were up 1.8 percent, making it the best month since September of 2015; Hurrican Harvey hitting the Texas coast last year also had an impact on the last week of August sales. These insights come from TDn2K’s Black Box Intelligence™ data, based on weekly sales from over 30,000 locations representing 170+ brands and nearly $70 billion in annual sales.

DALLAS (PRWEB) SEPTEMBER 07, 2018

The restaurant industry continued its recovery in August. Same-store sales were up 1.8 percent, making it the best month since September of 2015. However, Hurricane Harvey hit the Texas coast in August last year, greatly impacting sales in the last week of that month, giving restaurants a built-in advantage. That soft comparison resulted in same-store sales growth of 2.9 percent for the last week of August 2018. These insights come from TDn2K’s Black Box Intelligence™ data, based on weekly sales from over 30,000 locations representing 170+ brands and nearly $70 billion in annual sales.

“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™. “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.”

Despite Sales Recovery, Restaurants Continue to Lose Guests

Same-store traffic was down -0.8 percent in August. It is telling that the industry posted the strongest result in the last three years, but it was not enough to escape the continued slide in guest counts.

As with sales, traffic comparisons were also aided by the hurricane. Traffic for the first three weeks of August, a reasonable representation of the month’s traffic performance, dipped -1.2 percent. Although not particularly strong (April’s traffic growth was better), this represents a 0.5 percentage point improvement over July.
Economic Growth Robust, But Consumer Spending May Begin to Moderate

“There are few signs that the economic upsurge will slow sharply anytime soon,” predicted Joel Naroff, president of Naroff Economic Advisors and TDn2K economist. “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.”

Restaurant Staffing Difficulties Continue

With the national unemployment rate average at 3.9 percent over the last four months, it is no surprise that operators struggle to keep restaurants fully staffed. Things are even more difficult in certain parts of the country, with 20 states reporting 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. According to TDn2K’s People Report™ Workforce Index, 43 percent of brands expect to add management staff during the third quarter of 2018, while 49 percent plan to increase their hourly employee staff. Yet restaurants are finding that adding staff in this environment is not easy. According to this report, 59 percent of companies face increasing challenges for recruiting restaurant managers. A substantial 74 percent of brands said recruiting difficulty for hourly employees increased in the latest quarter.

Still, there is some good news. The latest People Report metrics indicate turnover rates for both managers and hourly employees dropped slightly in July. 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. 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.

Looking Ahead

Prior year events will have some unsettling effects on sales in the upcoming months. Hurricane Irma, which hit Florida and the southeast in early September 2017, will certainly impact comp sales for those areas, much the same as we reported from the Harvey effect. Other factors aside, we expect strong sales in the southeast in September. Given the magnitude of those economies, same-store sales should get a boost at a national level from the Irma effect.

At the same time, the recovery period in Texas following Harvey drove sales as many residents were unable to prepare meals at home. In addition, the influx of people pouring in to provide aid also drove demand. The result is tougher prior-year comps which may impact results in those regions.

Overall, given the current relative strength of the industry and September 2017’s soft results, there is room for some continued strong positive growth for the industry as we close the third quarter.

About TDn2K

TDn2K™ (Transforming Data into Knowledge) is the parent company of People Report™, Black Box Intelligence™ and White Box Social Intelligence™. People Report provides service-sector human capital and workforce analytics for its members monthly. Black Box Intelligence provides weekly financial and market level data for the restaurant industry. White Box Social Intelligence delivers consumer insights and reveals online brand health. TDn2K membership represents 43,000 restaurant units, 2.5 million employees and nearly $70 billion in sales. They are also the producers of leading restaurant industry events including the Global Best Practices Conference held annually each January in Dallas, Texas.

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