January was a decent month for restaurant sales. The topline numbers show same-store sales growth for the industry falling by 0.3 percent year over year during January according to TDn2K's Black Box Intelligence. However, if the regions most affected by the severe winter storms are removed from all calculations, the industry's sales remained essentially flat year over year. The industry is going through a period of much-awaited, albeit slow, recovery in recent months. Not surprisingly, guest satisfaction indicators tracked by White Box Social Intelligence are also showing strength for restaurants. Guest intent to return, which has been found to be the indicator most correlated with restaurant sales and traffic, improved by 14.7 percentage points when compared with January of 2017. Recent TDn2K research has once again found that service is a key attribute that differentiates top brands based on sales from the rest of restaurants, much more of a differentiating factor than food. Guest posts online suggest that those brands that offer superior service are continuously rewarded with more guest traffic and sales. Recent guest sentiment trends support these findings: positive guest sentiment based on service increased by 2.5 percentage points year over year in January, but more importantly, the rolling 3-month average shows a 4.2 point increase in the percentage of positive service mentions received by restaurants online.However, it is important to note that there is another longstanding trend for chain restaurants. For the last year, guest sentiment related to restaurant food has become more negative. This could be reflecting consumers becoming more demanding and raising their expectations, but most likely is also linked to the extremely high turnover rates being experienced by the industry, which is creating challenges in the back of the house when it comes to execution.
Restaurant sales growth has improved in recent months, but the gap between top-performing brands and those at the bottom based on same-store sales growth has been widening. And only about a third of all restaurant brands tracked by Black Box Intelligence actually achieved positive same-store sales growth during 2017. Clearly, there are some significant differences in terms of execution and results. A consistent finding by TDn2K when studying top performing restaurant brands and what differentiates them from others has been restaurant-level turnover. Top performing brands continuously report much lower turnover rates for their hourly employees as well as for all levels of restaurant management. During Q4 of 2017, those table service restaurant brands* that were among the top 25 percent based on same-store sales growth achieved hourly turnover rates that were on average 40 percent lower than those brands with the worse sales growth performance. TDn2K research using the White Box Social Intelligence provides some insight into the impact of turnover in restaurant operations. For those table service brands that were ranked among the top 25 percent based on sales growth, guest net sentiment based on the service they received was a staggering 31.4 percentage points higher than for those brands at the bottom of sales performance. The data suggests that having restaurants fully staffed with engaged and fully trained employees translates into perceivably better service for the guest. Furthermore, this superior service seems to be rewarded by guests through incremental restaurant visits and sales. *Table service brands include those classified under casual dining, family dining, upscale casual and fine dining.
The one consistent trend that the Restaurant Guest Satisfaction Snapshot has uncovered is that restaurant guests in the Mountain Plains regions are the most positive in the country when it comes to rating their restaurant experiences. During January, this region once again achieved the top spot in positive sentiment, followed by Florida and the Western region. Another fairly consistent trend has been restaurant guests in the Northeast tend to be less positive than others when describing their satisfaction based on recent restaurant visits. The three regions with the lowest positive guest sentiment during January were New York/New Jersey, New England and the Mid-Atlantic.
The Restaurant Guest Satisfaction Snapshot is produced by White Box Social Intelligence™, a TDn2K Product™. WBSI is tracking over 192 brands to benchmark customer satisfaction and is the only online tool that integrates with operational performance data to validate the impact on financial performance. The algorithm determining ranking brands is based on sentiment and determined by White Box Social Intelligence. Brands included in this monthly snapshot must have a total of at least 250 mentions for the month. Restaurants must have a minimum number of units to be eligible as well. DMA rankings consider only the largest 25 areas.