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In May, a weakening in the restaurant space was felt.  Domino's ( DPZ), Ruby Tuesday's ( RT), Red Robin (RRGB), Wendy's (WEN), even McDonald's (MCD) April same store sales numbers disappointed.  Jamba Juice (JMBA) was great (+12.3%, a true “pop”), Tim Horton's (THI (US) and Jack in the Box (JAC)K good, Carrol's (TAST) improving. Discussions of weather, leap year/day/weekend, gasoline prices, competitive intrusions, and changes in TV, couponing timing or focus dominated the discussion.

We looked at several indices to see what was happening.

Turns out that weather wasn’t much of a blip, really. Weather happens every year.     

 

United States Restaurant Same Store Sales (SSS) trends

Month/Survey

Knapp Casual Dining, SSS y/y

NRA, all, SSS growth net positive, y/y

MillerPulse  SSS, y/y, QSR/FSR (full svc.)

Dec 2011

+2.8%

+51 pts. more gainers

+6.0%/+4.0%

January 2012

+3.3%

+30 pts. more gainers

+6.2%/+3.8%

February 2012

+2.8%

+45 pts. more gainers

+5.5%/+2.1%

March 2012

-.7%

+44 pts. more gainers

+6.0%/+2.0%

April, 2012

+.8%

NA

+4.6%/+1.6%

 

Two other more limited indices are available: the newly rolled out Open Table restaurant traffic survey (populated by independents and reservation intensive restaurants), with Q1/Q2  at +3.5% and +2.4%.   The US Census Department survey of eating and drinking place sales was +8.9% for January-April 2012, but the sample is not normalized for the number of respondents (!?)

RBC’s MillerPulse showed QSR traffic positive but down 200 bpts in April but FSR negative traffic and slightly worse in March and April. Knapp showed positive traffic in January only, declining thereafter.

Takeaways:

  • Weather was not that big of a deal—perhaps felt in January only.
  • As a space as a whole, restaurant SSS gains must be colored for naturally rising check/pricing that should happen every year.
  • Casual dining remained weaker than hoped but still improved a lot from the 2009 trough levels. Only so much more potential from the overcrowded US market exists. None of the major players has a standstill or contraction strategy currently.
  • While positive SSS is necessary to cover inflation, SSS in moderating commodity markets (now, temporarily) are more valuable than in the converse, and imply better profit flowthrough.

 

 

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