Blog

HomeNews Story ReviewReport: Industry may be entering new cycle of growth

Report: Industry may be entering new cycle of growth

We’ll tag on to yesterday’s blog with another article from Nation’s Restaurant News about the current state of the restaurant industry. This report is from TDn2K (Transforming Data into Knowledge). I’ll copy the full article below, but here are some of the highlights that I found interesting:

  • Same-store sales rose 2.8 percent during the first quarter, the best quarterly performance since the recession
  • Year-over-year growth in number of jobs in restaurants increased by 2.9 percent during February
  • “Service” was the only attribute that increased its share of mentions during the month, rising from 8.8 percent to 12.4 percent
  • The percentage of positive mentions for “service” dropped significantly, from 33 percent in February to 18 percent in March
  • The best performing industry segment based “service” in terms of its percentage of positive mentions was Upscale Casual/Fine Dining, a significant shift from the best performing segment during February, which was Family Dining

I have copied the full article below:

250X250 Sign-up Ad.001

Restaurant industry same-store sales rose 2.8 percent during the first quarter, the best quarterly performance since the recession, indicating that the industry may be entering a new cycle of sustained growth, 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.

Same-store sales rose 0.8 percent in March, a significant drop from the 2.2-percent increase reported for February. However, the unusually cold weather experienced by many regions of the country impacted results.

“We continue to be optimistic about this new cycle of opportunity for the restaurant industry. For the first time since the recession, the industry has reported three consecutive quarters of same-store sales above 1 percent, and the last two quarters have both been above 2 percent, also a first in over six years,” said Victor Fernandez, executive director of insights and knowledge for TDn2K. “Though job gains slowed down during March and the unemployment rate remained at 5.5 percent, we believe our economy is already at full employment levels. Moreover, the unusually cold March experienced by many regions of the country may be an important factor behind the job growth slowdown, which hints at a recovery during April.”

“Consumers also seem to share our optimism, as shown by the rebound of consumer confidence in March after a small decline the previous month,” Fernandez added. “Although the March and Q1 same-store sales growth results are somewhat obfuscated by the effects of the extreme winter conditions experienced this year, the economic foundation underlying the strong sales growth reported for Q1 supports the idea that the industry’s growth goes beyond just having some relatively favorable weather conditions during the first half of the quarter.”

According to TDn2K retained economist Joel Naroff, president of Naroff Economic Advisors, “the outlook for the restaurant industry remains extremely positive. While the March jobs report was soft, rising job openings and low unemployment claims point to rebound in payroll growth.  More importantly, wage gains are accelerating and the low energy costs are leaving more money in peoples’ wallets. There is a lag between rising incomes and increased spending as households first put their financial houses in order. Then they start spending on those little things, such as eating out, they have given up. We should start seeing demand speed up by late spring.”

Traffic continues to challenge the industry. Although the 0.6-percent decline in same-store traffic reported for the first quarter is the second best quarter in the last two years, it represents a 0.4-percent decline from the fourth quarter. It is also evidence that even with the improved economic conditions, the industry continues to lose customers on a year-over-year basis. Same-store traffic fell 2.4 percent in March, impacted by the unseasonably poor weather this year, and contributed to the drop in traffic during the quarter. By comparison, traffic fell 1 percent in February.

In terms of job growth, the restaurant industry continues to reflect the increased activity of the national economy. Year-over-year growth in number of jobs in restaurants increased by 2.9 percent during February, based on the latest numbers reported by TDn2K’s People Report.

The industry has grown its number of jobs at about 3 percent or more for the last 15 consecutive months. The increased number of job opportunities being created within and outside the industry has also meant restaurant hourly employees and managers have been more inclined to leave their current positions than they were in previous years. This has been proven through the rising turnover levels that have been reported for hourly restaurant employees for the past 18 months, with February becoming the latest month in which rolling 12-month turnover has risen. Although annual turnover had also been rising for almost a year, February saw a small decline in this metric.

“Given the current job market and overall economic conditions, we expect management turnover, which is already at levels not seen since before the recession, to remain flat or even continue increasing in the next few months,” Fernandez said.

Restaurant guest satisfaction, measured by TDn2K’s White Box Social Intelligence, reported that during March, “food” continued to be the top attribute (out of food, service and intent to return) that generated the vast majority of online mentions when people talked about restaurant brands on social media. However, “service” was the only attribute that increased its share of mentions during the month, rising from 8.8 percent to 12.4 percent. The results come from a sample of 4.9 million distinct social media mentions tracked during the month.

Although “service” mentions increased overall in March, this increase was not necessarily a good thing for restaurants. The percentage of positive mentions for this attribute dropped significantly, from 33 percent in February to 18 percent in March. The best performing industry segment based on this attribute in terms of its percentage of positive mentions was Upscale Casual/Fine Dining, a significant shift from the best performing segment during February, which was Family Dining.

The percentage of positive mentions regarding food dropped during the month, from 34 percent in February to 29 percent in March. The percentage of positive “intent to return” mentions remained flat, at 46 percent for both months. The best performing segment regarding positive food mentions was also Upscale Casual/Fine Dining, while based on positive service mentions it was Casual Dining. Overall, this month’s results show a departure from February’s top performers of Quick Service and Family Dining, with the industry reverting to having predominantly Upscale Casual/Fine Dining as the segment that generates the highest percentage of positive mentions.

TDn2K (Transforming Data into Knowledge) is the parent company of People Report, Black Box Intelligence and White Box Social Intelligence. People Report provides service-sector human capital and workforce analytics for its members on a monthly basis. Black Box Intelligence provides weekly financial and market level data for the restaurant industry. White Box Social Intelligence delivers unparalleled consumer insights and reveals online brand health. Together they report on over 30,000 restaurant units, one million employees and 45 billion dollars in sales. They are also the producers of two leading restaurant industry conferences: Summer Brand Camp and the Global Best Practices Conference, each held annually in Dallas.

linkedin_follow

Written by

The author didnt add any Information to his profile yet

Call Now Button