May restaurant sales continue roller coaster ride

The roller coaster ride the restaurant industry has been taking since the start of the year showed no signs of stopping in May, according to new data from Black Box Intelligence â„¢, a division of Dallas-based TDn2K â„¢.

After a disappointing April, same-store restaurant sales in May returned to positive territory with strong growth of 1.1%. This is a solid 1.6 percentage point rebound from the year-over-year growth rate of last month.

Black Box Intelligence â„¢ data is based on weekly sales from over 31,000 locations representing over 170 brands and nearly $ 72 billion in annual sales.

“As expected, May confirmed that restaurants’ relative strength remains when it comes to sales momentum,” said Victor Fernandez, vice president of ideas and knowledge for TDn2K. “What’s even more encouraging for the industry is that in a month relatively free from external factors, such as winter storms and the shifts that have muddied the results in recent months, restaurants were able to show encouraging sales growth. “

In addition, sales growth in May was positive compared to the same month two years ago. Two-year comparable store sales growth has been positive in seven of the past eight months. The only exception was February, which was largely attributed to the negative effect of weather conditions. This longer-term recovery is good news for an industry struggling with market oversaturation and increased competition.

The number of guests continues to decline for most brands

However, some concerns remain regarding the health of the industry. On the one hand, same-store traffic continues to decline, as has been the trend since the recession. It is only with an acceleration in the growth of guest vouchers that the industry continues to experience positive sales. On the other hand, certain concerns about the macroeconomic horizon could put an end to this dynamic.

It’s no surprise that the number of guests in industry comparable stores year over year has fallen again. Comparable store traffic in May was down 2.1%. While that’s a 1.5 percentage point jump from April’s growth rate, it’s nowhere near what restaurants would like to be.

Fears of economic slowdown fueled by fears of a trade war

“After strong growth for almost a year, the economy has entered a period of significant uncertainty, created by the escalation in the use of tariffs to include not only China, but also Mexico,” he said. said Joel Naroff, president of Naroff Economic Advisors and TDn2K. economist. “Our two largest trading partners are under pressure and this is affecting costs for businesses and consumers. But the stakes are not limited to trade. Business fears of a tariff-induced slowdown are restricting capital investment.

“Growth in consumer spending has become inconsistent, in part because wage gains are moderating,” Naroff said. “And while the job increases have been solid, it looks like it could decrease as well. Despite these factors, the economy is not weakening. There is, however, less certainty that growth will be sustained at the high levels seen recently. Indeed, the prospect is that the expansion will continue at a more modest pace. That should be enough to keep consumer spending going, but again, not as solidly as we’ve seen it this year – unless trade uncertainties are resolved quickly. “

Industry with record turnover

Staffing remains one of the main challenges for restaurateurs. The current period of sustained employment growth and low unemployment has resulted in record turnover rates across the industry. This high demand for labor also leads to increased wage pressures, putting additional pressure on labor-intensive and often low-margin businesses like restaurants.

According to the People Report Workforce Index â„¢, a quarterly barometer of market pressure on employment in the restaurant industry, more than half of restaurant companies have reported an increase in difficulties in recruiting qualified employees in recent months. Vacancies also continue to be an increased challenge, particularly at the hourly level. Additionally, there have been reports of restaurant closings due to the inability to staff their locations adequately.

What are successful brands doing that is different?

While they undoubtedly face challenges like everyone else, brands in the top quartile of sales growth performance generally experience positive traffic growth. TDn2K research has shown that it is possible to increase the number of clients, but this growth comes from a combination of staff for excellent and consistent execution, a superior service experience at all levels, attention to detail and activating growth engines beyond traditional restaurant sales over lunch or dinner.

“It requires an investment to meet the challenges of staffing for great talent, retaining the best CEOs and a culture of collaboration and genuinely caring about the balance of employee, guest and all. stakeholders, ”said Wallace Doolin, Co-Founder and Chairman. by TDn2K. “This is how the best performing brands generate positive traffic. Employees want to come to work, guests want to come back, and investors want to invest for growth.

TDn2K (Transforming Data into Knowledge) is the leading provider of information and knowledge on human resources, financial performance and consumer insights in the restaurant industry through their People Report â„¢, Black Box Intelligence â„¢ and White Box Social Intelligence â„¢. TDn2K enables organizations to leverage benchmarking data to achieve the best performance results. TDn2K currently tracks, analyzes, and compares the largest real restaurant database in the United States, which includes 300 companies, 2.6 million employees, and nearly $ 72 billion in annual revenue. TDn2K also hosts the Global Best Practices Conference held annually in January in Dallas, Texas.

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