December was a good month for restaurant sales from a relative standpoint. Same-store sales grew by 0.3 percent year over year during the month, which was the second best result for the industry since March of 2016 (only October 2017 was better). This upward momentum reflected throughout the fourth quarter of 2017 drove the industry to positive same-store sales growth for the first time in the last two years. Not surprisingly, given this upswing, White Box Social Intelligence shows restaurant guests became more satisfied with their restaurant experiences during December and the fourth quarter of 2017 when compared with the same periods a year ago. Intent to return, which has been found to be the social metric that is most correlated with sales growth, dipped during November, causing some concern. However, restaurant guests became much more positive during December regarding their intent to revisit those restaurant chains they visited during the month. As restaurant sales struggled during the first three quarters of the year, so did guest sentiment for intent to return. Intent to return fell or was flat year over year during all months leading up to September. Since then, there has been a significant rebound in net intent to return sentiment* culminating with December seeing the biggest year-over-year improvement. Data has also shown that restaurant service is a key attribute strongly associated with top restaurant performance (even more than food). December and the fourth quarter of 2017 both also saw improvements in guest net sentiment regarding the service they received while visiting chain restaurants during the period. *Net sentiment is defined as the percentage of positive mentions minus the percentageof negative mentions for a specific attribute.
Restaurant same-store sales growth is improving, but not all brands are benefitting from this rise in consumer spending. In fact, the gap in sales growth rates between top-performing brands and bottom performing brands has widened in recent months. The rising tide is not raising all boats equally. As a result, restaurant brands are left trying to answer the question: how do we win in today's highly competitive marketplace? One of the answers that TDn2K research continues to provide is that service is one of the most important differentiators between top and bottom performers, and one that is not easily replicated by a brand's competitors. Furthermore, there is a connection between restaurant employee retention and guest service perception. During the fourth quarter of 2016, top performing restaurant brands (defined as those in the 25 percent with the highest same-store sales growth) had restaurant hourly employee turnover rates that were 30 percentage points lower than those brands in the bottom 25 percent of performance. Intuitively, it makes sense to assume those brands with higher turnover are probably not providing the highest levels of service to their guests. High employee rotation would mean employees in training or with little tenure are commonly on the front lines servicing the guests. But is that really the case? White Box Social Intelligence data shows that those same top performing brands, which tend to have the lower turnover rates, also receive on average much more positive service comments from their guests. Service net sentiment is on average 27.4 percentage points higher for top performing brands based on same-store sales than for bottom performing brands. In other words, top performing brands on average get 27 percent more positive service mentions than those with the worse same-store sales growth rates.
Restaurants doing business in the Mountain Plains and Western region typically encounter a more positive sentiment from their guests than restaurants in other regions of the country. The former, in particular, has led the country in most positive guest sentiment during 2017 and the trend continues into the new year. On the opposite end of that spectrum, guests in New York-New Jersey and the New England regions continue to have a less positive outlook regarding their restaurant experiences. Although the New York-New Jersey region had the lowest positive guest sentiment overall, the only individual guest satisfaction attribute in which it ranked as the worst was value. This would suggest guests in this region put a heavy weight on this attribute when judging their overall guest sentiment. In the case of New England, which was the second-lowest ranking region based on overall positive guest sentiment, the only individual attribute in which they rank last is on service. Both service and value have been found to be key differentiators between top and bottom performing restaurant brands based on same-store sales growth in recent quarters.
The Restaurant Guest Satisfaction Snapshot is produced by White Box Social Intelligence™, a TDn2K company™. WBSI is tracking over 550 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.