The latest results reported by TDn2K’s Black Box Intelligence brought plenty of good news to the industry. Same-store restaurant sales grew by 0.8 percent during October, which was the fifth consecutive month of positive growth. Perhaps more importantly, same-store sales growth on a two-year basis revealed positive growth after averaging -0.9 percent for the previous six months. There is some momentum in sales and guests are spending increasingly more every time they visit a restaurant.
Consumer sentiment is high and suggests this could be a good holiday season for spending. But what can we learn directly from restaurant guest sentiment? How are guests feeling about their recent interactions? According to TDn2K's White Box Social Intelligence, guest sentiment is also strong and has been improving continuously in recent months.
During October, positive guest sentiment based on restaurant food, service and intent to return improved for each of these metrics. Rolling 3-month average positive sentiment is also rising, which suggests increasing restaurant guest satisfaction is an ongoing trend and not just a momentary improvement.
What is especially encouraging for the industry based on these results is the improvement in guest sentiment towards restaurant food. The chain restaurant industry stumbled with sentiment based on this attribute in recent months. This improvement in overall guest satisfaction with chain restaurants is another optimistic sign for the industry as it attempts to carry its sales momentum through the end of the year and achieve its first year of positive same-store sales growth since 2015.
Although Black Box Intelligence has revealed there is some recovery in the chain restaurant sector and sales are better now than they were a year ago, this improvement is small and only relative. In many cases, data has shown sales are still down when compared with restaurant performance two years ago. Furthermore, almost half of the brands tracked are still reporting negative same-store sales growth year over year. The underlying message seems to be: average performance is not good enough in this environment.
So the question becomes, what can we learn from top performing brands? During the third quarter of 2018, restaurant brands that were in the top quartile of sales growth performance among full service brands (casual dining, family dining, upscale casual and fine dining) reported same-store sales growth that was 10.0 percentage points better than those brands in the bottom quartile. The stark difference in sales performance is astounding. Additionally, the gap between top and bottom performing brands has been expanding in recent years.
Research from TDn2K recently revealed that service is the attribute that frequently most differentiates top performing brands from the rest of the industry. When guests discuss their restaurant experiences online, the word “experience” is most commonly associated with best performing brand service sentiment.
But how are top performing brands delivering on this superior service experience? One way is through their focus on people practices leading to better employee retention. Those same top performing brands based on sales growth achieved hourly employee, non-management turnover rates that were almost 30 percentage points lower than those brands with the lowest same-store sales growth. It is not surprising that having an engaged, trained and tenured employee base seems to lead to better service perception by guests, which in turn rewards those brands with repeat business and positive word of mouth.
After a small slip during September, the Mountain Plains region returned to its usual place as the most positive in the country in terms of restaurant sentiment. This is nothing new. Since the beginning of TDn2K's Restaurant Guest Satisfaction Snapshot, guests in that region have demonstrated they tend to rate their restaurant experiences more positively than the rest of the country. In fact, during October, only two regions had over 50 percent of their online restaurant guest mentions classified as positive: Mountain Plains and Florida.
In the past, it has been a constant for markets such as Orlando and Tampa to appear in the list of DMAs with the highest positive sentiment based on the restaurant attributes tracked (food, beverage, service, etc.). But now, a new trend is emerging in which the entire state appears to have a more positive outlook on chain restaurants compared with the rest of the country.
Sentiment from restaurant guests in New York-New Jersey was much more positive, representing a change from historical results. This region is frequently the least positive in the country, but it showed some improvement in its sentiment during October.
The regions with the least positive restaurant sentiment during the month were Texas 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.