After a rocky start of the year, March was a relatively strong month. In fact, it was the second best month based on sales growth in the last two years. For the first time since 2015, restaurants have experienced two consecutive quarters of positive same-store sales growth. This indicates that the upward momentum in sales seen at the end of 2017 persists into 2018. It also warrants cautious optimism for increased consumer spending in restaurants throughout the rest of the year.
As the industry's sales upswing continues, so does guest sentiment based on the very important "intent to return" metric. TDn2K has found guest net sentiment for intent to return to be the leading indicator of sales growth. During March, as in recent months, we saw solid gains in intent to return net sentiment. There has also been upward momentum in service net sentiment. Guests are expressing their increased satisfaction with service during their restaurant visits. TDn2K research has also shown that service is a key factor for top performing brands.
A new trend in March was guest food net sentiment becoming slightly more positive year over year. Before now, guests had been less satisfied with their food at restaurants compared to the prior year. It is too early to tell if this is a reversal of this trend. However, the enhanced food offerings and execution in restaurants are hopefully paying off.
Last year was not a good one for restaurant sales. Same-store sales growth was -1.1 percent during 2017. The vast majority of chain restaurant brands experienced declining sales growth in their existing stores. However, some brands succeeded and even thrived in this challenging environment. In fact, the gap in performance between top and bottom performers was very wide during 2017. Top performing brands based on sales growth had same-store sales growth rates that not only were positive last year, but were also a staggering 9.7 percent higher than those brands with the lowest sales growth rates.
As would be expected, top performing brands based on sales tend to have higher net sentiment scores. What are the guest sentiment attributes that differentiate the best from the worst? Top performing brands have experienced significantly higher sales growth on their beverages over the past two years. In turn, their guests discussed beverages at these brands in a much more positive light online. In fact, beverage net sentiment for these top performing brands was 21.1 percentage points higher than for those brands in the lowest tier of sales performance. The guests have said through both their dollars and their online activity that they care about beverages when they go out to eat. More importantly, it seems to be one of those key differentiators that helps them decide where they will dine. Brands with the best drinks are rewarded with incremental sales dollars overall, not just for their beverages.
Furthermore, beverage net sentiment proves to be vital for both table service brands (where it includes alcoholic beverages) as well as counter service brands (where it is based on soft drinks and coffee). Regardless of industry segment, guests are looking for much more than just food when they make their dining decisions.
After a short stumble during February, the Mountain Plains* region topped the list again with the most positive online restaurant mentions during March. This has been a long standing trend. Operators in this region can expect guest comments and reviews to be more positive there than in the rest of the country.
California and the Western region** also led the way with positive online comments in March. It is important to mention that restaurant sales in these two regions have been much stronger than for other regions in recent months.
On the other end of the spectrum, there were only two regions of the country for which less than 30 percent of all restaurant online mentions were positive: Texas and New York-New Jersey. Restaurant guests in Texas are not usually among the least positive in the country. However, guests in the New York-New Jersey region have typically shown dissatisfaction with their restaurant experiences. Or, at least, they are among the most open to sharing their not-so-positive sentiment online.
*The Mountain Plains region consists of Colorado, Kansas, Missouri, Montana, Utah and Wyoming.
**The Western region consists of Alaska, Arizona, Hawaii, Idaho, Nevada, Oregon and Washington.
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.