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Same-Store Sales Chilled by February Weather


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February weather was awful, and many are still cleaning up or thawing out. Aside from the ice dams and school closures, the brutal weather made some big impacts on the restaurant industry. 

A pair of analyst notes from equity research analyst Brian Vaccaro at investment banking firm Raymond James showed just how bad the weather effects were. 

“Several parts of the country experienced precipitation that was two to four times above normal levels, while severe winter weather caused particularly weak trends in the fourth week of the period (first three weeks averaged slightly positive year-over-year),” wrote Vaccaro. 

He points to National Weather Service data for that precipitation data; which also shows the worst effects hit the Mid-Atlantic, New York, New Jersey the Midwest and the Northeast. All those areas had slightly positive early in the month, but fell with major weather events from polar vortices, massive snowfalls and ice storms. 

In the Midwest, same-store sales fell 2.57 percent, and traffic sank 5.59 percent, according to Black Box, a restaurant data analysis from research firm TDn2K. That’s a big shift from the negative .48 percent traffic and traffic decline of 2.66 seen in January. 

The few strong regions were California, the Southeast and Southwest. 

In another note, Vaccaro looked to Knapp Track, a research outlet that tracks same-store sales mostly in the casual dining space. According to Knapp Track, ugly weather sapped 1.5 to 2.2 percent from industry results overall. 

Seattle saw the most severe effects. According to Knapp Track, the market was hit with a 40.3 percent hit to same-store sales during the second week of February when the region saw record snow and deep cold. As that weather system moved east, it hammered the Midwest as well. According to Knapp Track, Minneapolis had a one-two punch of a 8 percent same-store sales decline in the first week of the month and a 20.2 percent hit in the second week. (And as the Franchise Times staff based in Minneapolis can attest, February was terrible.) 

Noodles even called out the brutal weather as a real effect for the first quarter. It’s been less of a talking point in earnings in recent results, but the company said all 60 restaurants in Colorado had to close during “historically poor” weather brought about by a Bomb Cyclone in the state. CFO Ken Kuick said the results were even worse than Knapp Track findings for the company. Bad weather sapped two to three percent from same-store sales. 

“Prior to the polar vortex, we've been running comparable sales growth of 4.1 percent. We ultimately anticipate first quarter comparable sales of between 1 percent and 2 percent system-wide,” said Kuick. “Importantly, in recent weeks when we have seen more normalized weather, comparable sales have returned to the 4 percent range.”

Vaccaro did see some positive factors for the industry. Fine dining got a nice boost from Valentine’s Day, it was the best performing segment in TDn2k numbers. And while the government shutdown slowed down refund checks, checks went out fast when government workers returned, largely catching up with a typical year. And taking weather out of the equation, he sees the positive momentum seen in January continuing. According to Vaccaro, the seems to be slightly positive, driven by real wage growth. 

But at least the industry had plenty of company amid the miserable February weather, as Red Robin CEO Denny Post said. 

“I think it's fair to say we've seen an impact similar with our competitors,” said Post, during a fourth-quarter earnings call. “The thing about weather is it affects us all, right?”

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Tom KaiserTom Kaiser is senior editor of Franchise Times. He can be reached at 612.767.3209, or send story ideas to tkaiser@franchisetimes.com.
 
Beth EwenBeth Ewen is editor-in-chief of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Laura MichaelsLaura Michaels is managing editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 

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