After a disappointing January, the chain restaurant industry was able to reverse course and post positive same-store sales growth in February. However, at an anemic growth rate of 0.4 percent, February’s same-store sales were far from robust and continue to fuel fears that consumer spending in restaurants has slowed to a crawl. The average growth rate reported for the five months since the beginning of quarter three last year has been 0.1 percent. This insight comes from data reported by TDn2K’s Black Box Intelligence through The Restaurant Industry Snapshot, based on weekly sales from over 23,000 restaurant units, 120-plus brands, representing $57 billion dollars in annual revenue.
“There were several external factors outside of the economy and consumer sentiment that affected February’s restaurant sales,” says Victor Fernandez, executive director of insights and knowledge for TDn2K. “On one hand, the 2015 Super Bowl was included in January’s numbers, while this year, the game was played a week later and fell within February’s results. This meant February’s restaurant same-store sales were negatively impacted by the shift, since restaurant sales are hurt by this event [especially true for full-service restaurants more dependent on the dinner daypart]. On the other hand, severe winter weather continued to be a factor during February. As an example, the third week of the month saw same-store sales growth over 6 percent boosted by regions in the Eastern part of the country that experienced soft sales comparisons due to bad weather last year and which posted sales growth rates above 14 percent for the week.”
Sales growth in February was also challenging for the industry because of its strong performance a year ago. At 2.3 percent growth, February 2015 is tied with June for the best month based on same-store sales growth during the last thirteen months. On a two-year basis, same-store sales growth was about 2.7 percent in February, boosted by an increase of almost 5.0 percent in average guest checks.
Same-store traffic growth was down 1.3 percent during February, an improvement of 1.8 percent from January’s results and the best traffic performance since September of last year. Although traffic growth is also affected by the same external factors that affect sales, there was an interesting dynamic regarding average guest checks during February that may also be a driving force behind the traffic improvement during the month. Average guest checks grew by only 1.8 percent during February, which is the lowest increase in almost two years. The slowdown in average guest check growth in February compared with the previous months suggests that brands may be relying more on price promotions to address consumer dining patterns.
The best performing region in February based on same-store sales growth was New England. This region benefited from favorable sales comparisons: New England had the worst same-store sales growth in February of 2015. Weather has played a major part in this region’s results during the winter months over the last few years. The opposite occurred in Florida. Florida was the softest region in February 2016, but among the nation’s best a year ago.
The softness of February’s sales results can also be seen at the individual market level. Only 95 (or 49 percent) of the 193 DMAs covered by Black Box Intelligence achieved positive same-store sales growth during the month.