The restaurant industry had its best month based on same-store sales growth in almost three years during August according to TDn2K's Black Box Intelligence. The effect of Hurricane Harvey during the last week of August 2017 contributed toward a boost for this year's results, however, sales growth in August of 2018 would likely have been the best in years even without the help from last year's bad weather.
Growing sales year over year suggests restaurant guests are fairly satisfied with their restaurant experiences in recent months. According to TDn2K's White Box Social Intelligence, restaurant guests have increased their positive intent to return to the brands they are discussing online by about 15 percentage points on average over the last three months compared with the same months a year ago.
Guests are not only expressing they are more willing to visit those restaurants, sales growth data indicates they are spending more money at them as well. Service is an important component of the restaurant experience according to guest data collected by White Box Social Intelligence. Therefore, it is not surprising that as there is a surge in positive intent to return sentiment, guests are also significantly more satisfied with the service they have been receiving in recent months compared with last year.
The biggest challenge faced by chain restaurants today is the relentless decline in guest counts since the Great Recession ten years ago. In the case of casual dining, the largest segment of full service restaurants, traffic has declined by almost 9.0 percent since 2015. Nonetheless there are restaurant brands that have been able to successfully face this challenge and are even seeing an improvement in their guest counts.
According to Black Box Intelligence, top performing full service brands based on same-store sales growth during Q2 2018 (brands among the top 25 percent with highest sales growth) achieved same-store traffic growth that was a considerable 7.9 percentage points higher than those full service brands with the worst sales growth results. The key question is, “what are top performing brands doing differently to achieve those stellar results?”
There are definite clues found in what guests are saying online about their restaurant experiences. During Q2 2018, service scores for those top performing full service brands experienced service net sentiment scores that were almost 24 percentage points better than those brands struggling with their sales growth. For both full service and limited service restaurants, TDn2K studies have shown that one of the key drivers behind guest satisfaction and healthy sales growth is service. Guests adapt their expectations depending on the industry segment they are visiting, but they have a clear idea of what good service feels like in each of them and continuously reward it with incremental sales and repeat visits.
The improvement in restaurant guest sentiment was widespread from a regional standpoint during August. None of the eleven regions in the country had over 40 percent of their total online comments classified as positive during July. In contrast, five regions (Florida, Western, Mountain Plains, Midwest, and New England) all had over 40 percent positive sentiment in August. Furthermore, the worst performing region based on guest sentiment during July had only 31 percent positive online mentions.
In August, the region with the lowest positive sentiment (California) achieved 35 percent positive mentions. Restaurant sales data also shows this improvement from a regional perspective. All regions of the country achieved positive same-store sales growth during August, while only eight regions saw positive sales growth in the previous month.
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.