January was also the first time in 12 months all industry segments achieved positive same-store sales growth. Upscale casual, fine dining, and casual dining were the best-performing sectors on a comparable basis.
Only quick service and fast casual turned in same-store sales expansion lower than 1 percent. “This segment data suggests growth was stronger in experience-based occasions during the month, while convenience-based occasions may have grown at a slower pace,” Black Box said,
Also worth noting, however, is the fact counter-service has treaded along a much steadier path in recent years. The growth curve hasn’t dipped as severe one way or the other, making comparable gains milder, generally speaking.
The labor issue deepens
Continuing another trend, restaurant employment continues to increase. Black Box said it grew 2.3 percent, year-over-year, in December. Restaurants are adding more and more jobs despite dealing with a tight labor market. It’s making it increasingly difficult for chains to fully staff units.
With an unemployment rate under 4 percent for 22 consecutive months, restaurants have struggled to find enough qualified employees to satisfy growth. For restaurants in particular, the challenge is exacerbated, Black Box pointed out, since operators need to fill vacancies created by turnover sustained at historically high levels. Turnover rates for hourly, non-management employees, and restaurant managers increased again during December, according to Black Box Workforce Intelligence.
And it always leads operators to the following question: What impact is this dynamic having on guest sentiment and store-level performance? During 2019, service was the customer experience attribute that most differentiated the top and bottom performers based on sales growth, Black Box said.
The gap in guest net sentiment was greater in service than it was for food, beverage, ambiance or even value.
“For years, guests have expressed through their online comments and reviews that superior service the aspect of the restaurant experience they are most likely to reward with incremental sales,” Black Box said.
Data showed that lowed turnover rates are undeniably linked to sales and traffic, meaning, simply, restaurants need to work on becoming a top-performing company in the workplace before they can expect that success in-store.
From last month’s report, Black Box said restaurant companies in the top 25 percent of same-store sales growth had a service net sentiment 17.4 percentage points more positive than those in the bottom 25 percent of sales growth.
In the fourth quarter of 2019, those brands in the top quartile reported management turnover rates, on average, 7.7 percentage points lower than those restaurants with the worst sales growth.
It puts a different spin on the notion, “the restaurant industry is struggling.” There is a gap at play.
Wally Doolin, chairman and co-founder of Black Box, offered some commentary on this recently. Essentially, the challenges afoot are presenting opportunities for some while burying others.
The industry’s 2019 top-quartile gap in comp sales versus the bottom quartile was 8.1 percent in sales and 8 percent in traffic. In fact, the only positive traffic came in that leading 25 percent.
As Matthew Mabel, president of consultancy Surrender Inc., told QSR recently, “Somebody always wins in a downturn. The strong definitely can get stronger. The weak may hurt or go away. It’s Darwinian.”
Additionally, examining check growth, the top quartile took 3.2 percent in price and the bottom took 3.1 percent. It shows today’s winners can offset cost without losing traffic, Doolin said.
For the bottom quartile, it proves pricing to cover wage cost alone is coming at the expense of traffic.
And what’s separating those fields? “… the brands winning in attracting, retaining, and developing talent,” Doolin wrote.
He added operational execution and attracting younger employees and guests, people who seek out a sense of purpose in brands, is also defining successful restaurants. Couple that with product excellence and service execution and you have a powerful formula—one that might just be recession proof.