[img id=”1″ align=”right”] October proved to be a relatively good month for the restaurant industry as measured by same-store sales and traffic. The latest results published by Black Box Intelligence and People Report through The Restaurant Industry Snapshot for October, which was released this week, show same-store sales posting positive growth for the second consecutive month. Same-store traffic, albeit still negative, has now posted 4 consecutive months of improvement when compared with the previous month’s results.
Same-store sales were 1.0% for October, a significant improvement of 0.9% over the results reported for September. This is the largest monthly increase in same-store sales reported since March of 2013. The rolling 3-month same-store sales growth was 0.3% for October, the first time this metric has posted positive growth since July. “Although the October results might be easily considered as very optimistic signs for the industry, these should be put in the context of what was happening throughout vast regions of the country at the end of October last year as hurricane Sandy hit our shores. In fact, for the last week of October 2013 the regions most affected by the storm (Mid-Atlantic, New York-New Jersey, and New England) all reported same-store sales above 3.0%,” commented Victor Fernandez, Executive Director of Insights and Knowledge for Black Box Intelligence and People Report. “However, isolating the effect of the “Superstorm” we believe there were actual positive results during October for the industry, as according to our metrics each of the four weeks of the month posted positive same-store sales.”
“The industry continues to have a guest count problem”, continued Fernandez, “but the latest results show very positive signs regarding same-store traffic growth”. Traffic in comparable stores was -1.4% for October, an improvement of 0.5% from the value reported for September and the highest traffic growth rate reported since November 2011. “In addition to the favorable comparisons due to the effect of Sandy last year, we might also be seeing the effect of the pent up demand finally resulting in increased restaurant visits as Consumer Edge Research’s Restaurant Willingness to Spend Index registered 3 consecutive months with a value over 90 during the July-August period and the political uncertainty that was hurting consumer confidence eased after the government shutdown and debt ceiling crisis were defused by the middle of the month.” However, after seeing the 3-month rolling average for Restaurant Willingness to Spend trending up since March the trend has now reversed with the sharp drop in this index experienced during October. The Restaurant Willingness to Spend Index registered a value of 86 during the last month, a drop of 6 points from the value reported for September. This is the biggest decrease in the value of this index since March. “This tumble coupled with the fall in overall consumer confidence experienced during October might indicate that the strong improvements seen during the month may be short lived.
From a regional standpoint, the best performance in October was reported by the Texas region with 2.2% growth in same-store sales and -1.0% in traffic. The worst regional performance was reported by the Southwest region with same-store sales growth of -1.0% and -3.3% for traffic. The Mid-Atlantic region, which had seen the worst regional results over the last 5 months showed very positive results during the last week of the month, primarily due to the soft sales a year ago due to the storm. The overall improvement in same-store sales seen at the national level also translated into improvements at the individual market level; 125 of the 182 DMAs covered by Black Box Intelligence posted positive growth in comparable stores during September, up from only 99 DMAs reporting positive sales growth the previous month.
According to the latest numbers published by People Report, turnover at both the restaurant hourly and management level has increased during the first 9 months of the year when compared with 2012. However, for the second consecutive month there was a decrease in rolling 12-month turnover for restaurant managers. Job growth continues to show positive signs for the industry, as September posted a 1.9% increase in headcount year-over-year. This latest result represents an increase from the 1.1% and 1.4% annual growth reported for August and July, respectively.
The Restaurant Industry Snapshot is a compilation of real sales and traffic results from over 180 DMAs from 100+ restaurant brands and approximately 16,000+ restaurants that are clients of Black Box Intelligence. Currently, data is reported in four distinct segments: casual dining, upscale/fine-dining, fast casual, and family dining. Black Box Intelligence is a sister company to People Report, which tracks the workforce analytics of one million restaurant employees. The Restaurant Industry Snapshot also includes the Restaurant Industry Willingness to Spend Index from Consumer Edge Research, which is a monthly household survey of more than 2,500 consumers. Consumer Edge Insights is a marketing partner with Black Box Intelligence and People Report.