The restaurant industry continues to see improved results when it comes to its same-store sales. In fact, Q3 of 2018, with a sales growth rate of 1.2 percent, was the best quarter for the industry in the last three years according to TDn2K's Black Box Intelligence. But this improvement is only relative. Restaurants continue to lose guests year over year and on a two-year basis, same-store sales growth remains negative. However, there is no doubt results have improved in 2018 for restaurants.
A factor behind these improved results has been an increasingly positive guest sentiment around key components of the restaurant experience. TDn2K research has repeatedly shown the relationship between improved guests' stated intent to return and growing sales. Service has also been highlighted as a key driver behind superior performance by restaurant brands that are leading the industry in sales growth.
Both of those guest sentiment metrics improved during September as the industry posted another month of solid sales growth. Positive sentiment regarding service improved by 3.7 percentage points when compared with September of last year. Intent to return became more positive by 2.3 percentage points year over year during the month.
An area in which restaurants have been struggling in recent months has been food perception. Guests are becoming less positive regarding their food mentions online. Either consumer expectations are rising or restaurants are having trouble delivering on the food quality they aim to provide.
While restaurant sales and traffic performance improved in recent quarters, TDn2K's Black Box Intelligence data shows that the gap in same-store sales and traffic between top and bottom performers has been widening. Those restaurant brands that are finding success in the marketplace are increasingly doing much better than those in the bottom quartile of sales growth performance.
During the second quarter of 2018, those limited service brands (quick service and fast casual) in the top performing quartile (those with same-store sales growth in the top 25 percent of all limited service brands tracked by Black Box Intelligence) achieved sales growth that was almost 8 percentage points higher than those limited service brands in the lowest performing quartile (those among the lowest 25 percent of same-store sales growth).
Obviously, there is a lot of value in being a top performer and being able to increase revenues at this much higher pace. So the question becomes: what are these top performing brands doing differently that is setting them apart from their competitors? According to TDn2K's White Box Social Intelligence, one of the answers comes in the form of improved ambiance perception by their guests. Limited service brands in the top quartile of sales growth performance during the second quarter had a net sentiment score for ambiance that was 16 percentage points higher than the scores for brands in the lowest quartile of sales performance. Another important insight that comes from analyzing the actual ambiance-related mentions is that in many cases, improving ambiance perception is not a matter of capital intensive investments. Frequently, it is as simple as focusing on the people side of the equation to improve the restaurant's cleanliness, the appearance of the table when a guest sits down and the speed at which those tables are getting bussed and prepared for the new guests walking in.
September saw a significant shift in restaurant sentiment when analyzed from a regional perspective. Typically, we have seen the Mountain Plains as the region of the country where restaurant guests consistently tend to have a much more positive outlook when discussing their restaurant experiences than anywhere else in the country. During this month, Mountain Plains remained among one of the three regions where more than 50% of all restaurant mentions where classified as having a positive sentiment. However, the region that established itself as having the most positive restaurant sentiment during September was Florida.
Major markets in Florida (Orlando, Miami and Tampa) have frequently risen to the top based on their positive sentiment across individual attributes of the restaurant experience. However, it is until this month that the entire region posted the most positive sentiment overall.
The trend that continued during September was restaurant guests in the New York-New Jersey region being the least positive in the country when describing their restaurant experiences online. Restaurant operators doing business in that region most must account for their reviews in that area to be more critical of their performance, especially when comparing with guest sentiment across their other locations if they operate them in other regions of the country.
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.