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Strong April restaurant sales fuel optimism for Q2

The data show same-store sales growth of 1.9 percent in April, a 1.1 percent improvement from the previous month’s year-over-year growth rate.

May 8, 2015

Restaurant sales rebounded during April after lackluster March performance and the subsiding winter weather, according to data from TDn2K's Black Box Intelligence report, The Restaurant Industry Snapshot for April, that captures weekly sales from more than 20,000 restaurants representing $48 million dollars in annual revenue.

The data show same-store sales growth of 1.9 percent in April, a 1.1 percent improvement from the previous month’s year-over-year growth rate, TDn2K reported in press release. This is the tenth consecutive month of positive same-store sales for the industry.

"As expected, the downturn in March seems to have been primarily weather related. April results confirmed that the underlying economic conditions and consumer optimism are relatively solid and the restaurant industry’s positive sales momentum continues into the second quarter," said Victor Fernandez, executive director of insights and knowledge for TDn2K. "We are currently in the strongest period of growth for chain restaurants since the recession. The only other comparable growth period has been the twenty consecutive months of positive sales growth ending in February 2012. However, that was as the industry was coming out of the highly depressed sales at the end of the recession and the average same-store sales growth rate during those months was only 1.5 percent. As a comparison, the average year-over-year sales growth rate during the last 10 months has been a more impressive 2.2 percent."

The 1.5 percent growth rate posted in April proves that declining guest counts continue to be the biggest challenge for the chain restaurant industry.

"Once the effects of winter are removed from the equation, it is clear that the industry is still having trouble retaining the frequency with which diners visit their establishments. Additionally, diners are spending their money on other food away from home options such as independent restaurants, convenience stores, prepared foods from grocery stores, etc.," Fernandez said. "What we have observed over the last three months is that diners are going out to eat less at chain restaurants, but every time they dine at one of these restaurants they are spending more than they were a year ago."

Regional results show further signs of strength for the industry, the announcement said. All eleven regions of the country experienced positive growth in their same-store sales for the first time since January 2015, with California as the highest performing region at 3.1 percent same-store sales growth. The Southwest performed the worst at 0.01 percent growth, while 149 individual markets out of the 190 DMAs tracked by Black Box Intelligence experienced positive growth in same-store sales during April.

The restaurant industry mirrored the slowdown in net job creation experienced by the overall national labor market during March. Restaurants added jobs at a 1.9 percent rate year-over-year in March, a 1.0 percent decline from the growth reported for February, according to TDn2K’s People Report.

Despite the pressures of the tightening labor market, the drop in job growth continues to affect the restaurant industry, which again experienced rising turnover levels for both restaurant managers and hourly employees during March. Manager 12-month rolling turnover increased in eleven of the past twelve months, while restaurant hourly employee turnover steadily rose the past twenty months.

Restaurant guest satisfaction reports show that "food" continued to be the top attribute (out of food, service and intent to return) based on online mentions during April, as measured by TDn2K’s White Box Social Intelligence. The percentage of all food-based mentions dropped from 84 percent in March to 78 percent in April. "Service" generated the greatest increase in percentage of mentions, increasing to 16 percent of all mentions (a 4 percent increase from the previous month), with a continuing increase over the last four months.

The gains may represent a loss of guest satisfaction related to this attribute, the announcement said. An average of 32 percentage of all service mentions were positive 32 during the period between December and February. Since then the averaged decreased to 20 percent positive service mentions.

Full service restaurants continue to dominate when it comes to percentage of positive mentions for these three attributes, the firm said, with Upscale Casual/Fine Dining as the top performing in positive food mentions. This segment also out-performed for "intent to return" mentions for the second consecutive month. Casual Dining earned the highest percentage of positive service mentions, which now has been the top segment during three of the last five months.