Edit ModuleShow Tags
Edit ModuleShow Tags

TDn2K: Sales Decline Again, Restaurant Traffic Still Dismal


Published:

It was another month of mediocre performance for restaurants, according to TDn2K’s monthly survey of the industry. 

Same-store sales fell for the second month by just under one percent (-.71 percent), it’s slightly better than July’s -.96 percent decline, but marks another month of acceleration in the wrong direction compared to the three-month average of -.56 percent. Traffic did slightly better than July too, but not by much. Traffic declined by 3.87 percent, not a great turnaround from July’s 4 percent decline. 

According to the research and analytics firm, the month does lap a moderately strong period of 2018 (when it saw nearly 2 percent sales growth) but there’s not much to explain the decline. 

“This occurrence of two consecutive months of negative sales growth could not be blamed on any external factors, such as the previous time in 2018 when weak sales were largely due to extreme winter weather,” according to researchers at TDn2K.

Traffic has become a huge problem, though as vice president of insights and knowledge, Victor Hernandez said, it’s not completely dismal. 

“There is little comfort in knowing the industry keeps losing guests at the same pace as it has been for the last year,” continued Fernandez, “but at least the bleed is not getting worse.”

The cause of the ongoing traffic decline, however, is a nebulous collection of many factors. There are still too many restaurants but nobody wants to slow growth or narrow their deal pipeline. Some are looking to international markets to get it, but listening to any of the quarterly results or watching unit counts tick up, every brand looks as if it will continue what restaurant analyst Malcolm Knapp calls “a game of chicken,” exactly what brands did in the explosive growth era of the 80s when 130,000 fast-food outlets seemed like a lot. Now, according to preliminary numbers from the Franchise Times Top 200 (due in October), there are there are 281,100 locations just among the Top 200 restaurant brands. 

And in the face of recession worries and most recently include an inverted yield curve, scary indicators in auto sales and shipping (not to mention that trade war), prices keep going up. According to the Bureau of Labor Statistics, prices for food away from home are up 3.2 percent as of July. But whether people are cutting back in the face of higher prices or the increases just aren’t enough to cover the traffic declines due to other factors remains to be seen. 

Could September fare better? Not likely, since a notable spike in results in the third quarter of 2015 that includes September, it’s been a mixed bag that generally trends down. There’s a bump in sales from school returning to session, but that’s often balanced by volatile fall weather—and Dorian is just one storm in the busiest month for ugly weather. 

The good news? Fine dining and, to a lesser extent, family dining continue to shine. The former is on a two-year stretch as the strongest performing category of the industry and the latter has been growing sales significantly since 2018, according to TDn2K. 

Edit Module
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags


Covers everything from good news to bad judgment

About This Blog

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 senior editor 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 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.
 

Archives

Categories

Feed

Atom Feed Subscribe to the Franchise Times News Feed »

Recent Posts