Restaurant F&B Enduring Weakest Quarter of the Year in On-Premise Sales

According to GuestMetrics, food and beverage sales at table service restaurants and bars through mid-August 2013 continue to be very soft, and unless there is an improvement in the coming weeks, 3Q13 risks being the weakest quarter of the year for on-premise.

“Our data indicates that across the board during the 4-week period ending August 11th, trends for full service restaurants and bars were very weak,” says Bill Pecoriello, CEO of GuestMetrics. “On-premise alcohol volumes were -2.9 percent during 1Q13, recovered somewhat to -1.6 percent in 2Q13, but during the first half of 3Q13, have decelerated to -3.5 percent, which is not an encouraging sign.  In terms of the specific alcohol categories, beer volumes were -4.3 percent in 1Q13, improved to -2.1 percent in 2Q13, and thus far in the quarter, have deteriorated to -4.6 percent.  Spirits volumes were -2.4 percent in 1Q13, saw a slight improvement to -1.7 percent in 2Q13, and weakened to -3.0 percent in 3Q13 to-date.  Wine volumes started off the year on a strong note at +0.7 percent in 1Q13, softened slightly to +0.5 percent in 2Q13, and have now dipped into negative year-over-year territory at -1.3 percent, likely due to the recent weakness we’ve been seeing among fine dining restaurants.”

 “To get a better sense for what is causing the weakening trends in alcohol, we also looked at traffic trends within on-premise,” says Brian Barrett, president of GuestMetrics.  “Overall traffic to full service restaurants and bars started out the year at -1.4 percent in 1Q13, improved slightly to -1.2 percent in 2Q13, and thus far in 3Q13, has deteriorated to -1.9 percent.   Furthermore, all three segments within on-premise have decelerated during July and the first part of August relative to where they were during 2Q13.  Traffic to casual restaurants has been weak in a relatively consistent manner throughout the year, going from -2.3 percent in 1Q13 to -1.6 percent in 2Q13, and -2.1 percent in 3Q13 to-date.  Traffic to bars and nightclubs has gone from bad to worse, from -2.5 percent in 1Q13 to -2.9 percent in 2Q13, and has fallen to -4.4 percent in 3Q13 to-date.  Lastly, while fine dining started out the year quite healthy at +2.3 percent in 1Q13, it then weakened to +1.2 percent in 2Q13, and is now flat vs. year ago in 3Q13 to-date.”

“To help understand why on-premise trends have been suffering, some of the commentary from our sister company, Consumer Edge Research, is informative in understanding the underlying drivers of this weakness,” says Peter Reidhead, vice president of Strategy and Insights at GuestMetrics. “Based on the monthly survey that CER has been conducting on the broad state of the US consumer for almost four years now, its survey has shown consumers have scaled back their spending across dozens of discretionary categories since about late spring.  CER has indicated while it’s difficult to pinpoint the precise cause of the pullback, the one bright spot is that discretionary spending in early August showed a slight improvement across all income groups, which could potentially be a positive sign for on-premise in the coming weeks if that trend holds.”     

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