The good news continued for the restaurant industry during April. With same-store sales growth of 1.5 percent, April became the strongest month for the industry since September of 2015. The industry was even able to achieve small positive growth when comparing sales on a two-year basis, something that very rarely occurred during the last two years. This provided some new hope that we may be seeing a longer-term recovery in restaurant sales.
Meanwhile, online guest sentiment has mirrored this resurgence in the industry. Guests are increasingly satisfied with their restaurant experiences and saying they are more likely to return to brands they have visited in recent months. This also fuels optimism towards continued recovery for the industry.
April saw the highest percentage of positive “intent to return” online mentions by restaurant guests in the last three years. It also represented the biggest year-over-year improvement in percentage of positive “intent to return” mentions. However, there is an area of caution for the industry if indeed recovery is to be sustainable. There was a sharp drop in the percentage of positive service-related mentions during April. Given the importance that TDn2K research has placed on service as a differentiator for top performing brands), this will be a metric that will have to be studied closely in upcoming months. April could perhaps have been a data anomaly, or service levels may be starting to decline. Service-related problems would not be surprising, considering the severe turnover challenges faced by the industry today.
For the last year, restaurant operators have struggled to find and keep enough qualified employees. The fact is, the industry is experiencing historically high turnover rates for restaurant employees and managers. So there is plenty of reasons for operators to be worried about staffing levels.
As TDn2K research has shown, there is the clear connection between staffing, service, guest sentiment and its resulting effect on a brand’s sales and traffic. During the first quarter of 2018, top performing restaurant brands based on same-store sales reported higher net sentiment scores from their guests than underperforming brands based on sales. One of the critical differences between those same top performing and bottom performing brands based on sales growth: top performers had restaurant hourly employee turnover that was a substantial 29 percentage points lower than those brands in the low performing group.
This is undoubtedly a cycle in which brands with better retention provide better restaurant experiences, which results in higher guest sentiment. This translates into incremental sales and traffic, then circling back to creating an environment in which employees are likely to stay at their jobs longer.
Restaurants operating in the Mountain Plains region probably need to expect positivity and dig deeper when analyzing their guest comments in this region to uncover any issues or areas of opportunity. During April, this region regained its position (which it has held for almost all months since White Box Social Intelligence started publishing the Restaurant Guest Satisfaction Snapshot over a year ago) as the most positive in the country based on its restaurant guest online comments and reviews. People there simply tend to rate their restaurant experiences higher than the rest of the country.
Rounding up the list of most positive regions during April were Florida and California. The latter was also among the most positive during March. By contrast, the only region of the country in which less than 25 percent of online guest comments and reviews were positive during April was New York-New Jersey.
Furthermore, this region is constantly listed among the least positive in the country when it comes to restaurant sentiment. Restaurant operators in this region need to account for this regional difference when evaluating their guest feedback there. Also in the least positive during April were the Southwest and Mid-Atlantic regions.
The Restaurant Guest Satisfaction Snapshot is produced by White Box Social Intelligence™, a TDn2K company™. 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.