Based on TDn2K's Black Box Intelligence™ latest numbers, there was plenty of encouraging news for the restaurant industry during December, as the industry closed the year with a bang. The month's same-store sales growth of 2.0 percent was the best result for the industry in over three years. Also, the best in the last three years was the sales growth rate recorded for the fourth quarter. After two years of negative sales growth, the industry finally posted a year of positive same-store sales growth (0.7 percent) for the first time since 2015.
Despite continued decline in guest counts, the trend of guests increasingly spending more each time they dine out carries into 2019. Increased spending and growing restaurant sales would suggest guests should be increasingly satisfied with their chain restaurant experiences. After all, it’s hard to imagine a situation where somebody spends more of their discretionary dollars on something towards which their sentiment was waning.
The latest data from TDn2K's White Box Social Intelligence™ shows that in December and through the latest months, guest net sentiment based on both restaurant food and service has become more positive year over year. Furthermore, despite the misconception that most users leave reviews or comment online in response to bad restaurant experiences, net sentiment* based on restaurant food and service is overwhelmingly positive and improving.
Although there has been some declining net sentiment year over year based on the guests' stated intent to return during December and the fourth quarter, net sentiment for this attribute is overwhelmingly positive and this positive momentum should carry over to the first quarter of 2019.
*Net sentiment is the percentage of positive mentions minus the percentage of negative mentions from the total number of online mentions for a given restaurant attribute.
The industry may be going through its strongest period of sales expansion in the last three years, but there are huge gaps in same-store sales performance between top and bottom performers in the marketplace. In the third quarter of 2018 according to Black Box Intelligence, top performing restaurant brands (those among the 25 percent with the highest sales growth) had same-store sales that were an astounding 10.5 percentage points better than bottom performers (those brands among the 25 percent with the lowest sales growth).
There is obviously a huge sales premium obtained by those brands at the highest levels of performance. But what makes those brands different? The most obvious place to start looking is studying what guests say about them when it comes to their food. After all, that is what comes to mind as the primary product offered by restaurants. What White Box Social Intelligence has been revealing over the past year, remarkably, is that guests don't rate food of those top performing brands much different than how they perceive food from those brands that are underperforming in sales.
Yes, guest sentiment based on food is higher for top performing brands based on sales (as would be expected), but the difference is surprisingly small. Net sentiment for the food of top performing brands was only 2.6 percentage points higher than for the food of the brands underperforming the most. The difference in sentiment for beverages was only slightly greater.
So what parts of the restaurant experience seem to matter the most and are driving such big gaps in sales performance? The data indicates that currently it is superior ambiance and service that are being rewarded by guests with incremental sales and traffic. Furthermore, this is a trend that has sustained for well over a year. The gaps in net sentiment centered on ambiance and service averaged 20 percentage points between top and bottom performers in the third quarter of 2018.
*top performers are 25% of brands with highest same-store sales growth; bottom performers are 25% with the lowest sales growth.
The strong restaurant sales growth achieved during December was widespread from a geographic standpoint. All ten regions of the country except for Florida had strong positive same-store sales growth of 1.0 or better during December. In the case of Florida, sales growth was essentially flat.
Guest sentiment during the month also reflected this sense of restaurant optimism across the country. For the second consecutive month, all eleven regions of the country had over half of all of their online restaurant mentions classified as positive.
As was the case starting with November, Florida now not only has some of the DMAs with the highest marks for restaurant guest sentiment, but also the region as a whole leads the country in positive restaurant satisfaction.*
Rounding out the list of top three regions with most positive restaurant net sentiment during December were both the Western region and Texas.
The regions with lowest positive sentiment were the Southeast as well as New York-New Jersey and New England, two regions continuously characterized by guests that tend to be less positive when describing and rating their restaurant interactions according to White Box Social Intelligence.
*Due to its size, Florida is considered one of the regions of the country in TDn2K reports. California and Texas are also classified as regions.
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.