The positive momentum experienced by the restaurant industry at the end of 2014 continued in January, as restaurant chains posted their highest same-store sales and traffic growth rates in more than six years, according to TDn2K’s Black Box Intelligence, through its Restaurant Industry Snapshot based on weekly sales from over 20,000 restaurant units representing over $45 billion dollars in annual revenue.
However, the real story behind these historically strong results is that the relatively mild winter we experienced during the first month of the year was much more favorable for restaurant spending than the severe storms that impacted the country a year ago. This is not to say that winter storms didn’t affect spending in January 2015, but their effect was not as wide or persistent as during last year. An improving economy driven by consumer confidence has also given the industry a great start to 2015.
Restaurant same-store sales grew 6.1percent in January, compared with the same period in 2014, and a 3-percent increase compared with December.
“It is difficult to determine exactly how much the changes in weather affected January’s same-store sales,” said Victor Fernandez, executive director of insights and knowledge for TDn2K. “To put things in perspective, the average same-store sales growth rate reported for the last five months of 2014 was 2.1 percent, and the sales growth reported for December was 3.1 percent. This leads us to believe that although underlying economic conditions are still very favorable for the industry and the positive momentum continues, most of the increase from the December growth rate is really a product of the milder winter this year.”
Further evidence of the industry’s strong performance during January, regardless of the weather effect, was the average weekly sales per restaurant unit. Even though January 2015 saw some severe winter storms, average sales per restaurant increased 2.5 percent, compared with the average reported for December 2014, and 4.9 percent compared with the November average.
“Considering that December average checks are typically higher due to the additional holiday spending, the results achieved by the industry during January continue to fuel optimism for a sustained positive sales trend and a very strong first half of the year,” Fernandez said.
Same-store traffic growth during January was 2.4 percent, compared with a 2.2-percent decrease in January 2014. January traffic also represents a 1.9-percent improvement compared with the December results.
Average year-over-year traffic for the period between October 2014 and December 2014 fell 0.3 percent, and the industry only achieved positive traffic growth during two of the months during that period, suggesting again that January’s result was artificially inflated by the weather effect.
The most encouraging news is that the economy continues to progress and the labor market keeps improving, creating income growth. The challenge to keep restaurants fully staffed has also increased.
According to the latest TDn2K People Report, restaurant manager and hourly employee turnover levels continued to increase in December. Rolling 12-month manager turnover has now increased year-over-year during the last nine consecutive months, while for rolling hourly turnover it has been increasing for the last 16 months.
As the industry maintains its current expansion mode, the pressure on staffing these new restaurants also increases. The industry added new jobs at a rate of 3.9 percent during December, which is the 14th consecutive month in which the job growth has topped 3 percent. These labor pressures are expected to continue throughout 2015, which means restaurants will likely need to accelerate their wage and salary growth if they are to keep pace as competition for talent heats up.
Customer satisfaction rises
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Restaurant guest satisfaction, as measured by TDn2K’s White Box Social Intelligence, increased in January, with “food” once again showing the largest share of online activity. Other tracked attributes include: “service” and “intent to return”. White Box Social Intelligence is a new TDn2K data product that tracks consumers’ restaurant-related social media mentions.
Food-centric online activity was 89 percent in January, from a sample of 4.5 million distinct social media-generated mentions, while intent to return generated the least overall mentions, only 4 percent of all mentions in the sample.
The attribute that generated the largest percentage of positive mentions was intent to return. A significant 60 percent of all mentions featuring intent to return were of a positive nature during the month. Only 23 percent of consumer online mentions during January demonstrated a positive sentiment towards the food from the brands tracked. Most mentions tend to be neutral in sentiment. Thirty-four percent of mentions referred to the brands’ service as positive.
The best-performing foodservice segment during January based on percentage of online food mentions that were positive was fast casual, a shift from December, when upscale casual/fine dining was the leading segment. For the service attribute, the best-performing segment was once again casual dining, while upscale casual/fine dining has now been the segment with the largest percentage of positive intent to return mentions for two consecutive months.
The Restaurant Industry Snapshot is a compilation of real sales and traffic results from more than 190 DMAs representing 110+ restaurant brands and more than 20,000 restaurant units that are clients of Black Box Intelligence, a TDn2K company. Data is reported in five distinct segments: casual dining, upscale/fine dining, fast casual, family dining and quick service. TDn2K is also the parent company to People Report and the new White Box Social Intelligence. People Report tracks the workforce analytics of one million restaurant employees. White Box Social Intelligence delivers consumer insights and reveals online brand health in relation to operational metrics. TDn2K reports on more than 30,000 restaurant units, one million employees and 45 billion dollars in sales.
White Box Social Intelligence is the newest product of TDn2K. Using a powerful search engine, White Box collects restaurant brand mentions from restaurant review sites and social media platforms such as Facebook, Twitter, and Google, among others. Data is filtered by a proprietary technology, which organizes mentions by industry specific operational attributes (food, service, intent to return, ambiance and beverage), as well as custom classifications designed by White Box members.