January restaurant sales take a dive

Feb. 9, 2018

Restaurant same-store sales growth were down in January after three straight months of flat or positive sales growth. The bad news comes from TDn2K's Restaurant Industry Snapshot, based on weekly sales from more than 30,000 restaurant units, nearly 200 brands and representing more than $68 billion dollars in annual revenue.

Same-store sales dipped -0.3 percent in the first month of the year, which represented a 0.6 percentage point drop from December, according to the report. It found that the driving force behind the slowdown was the drop in same-store traffic, which at -3.0 percent year-over-year represented a 1.3 percentage point decline from the previous month.  

"Although January's sales results are somewhat disappointing, we remain cautiously optimistic about the industry's performance," Victor Fernandez, executive director of insights and knowledge for TDn2K, said in the report. "Even if the month posted some small negative growth in sales, January's results were better than for any other month in the February through September period last year. Furthermore, there were some extrinsic factors that added noise to the month's results. The first week of the year was aided by a calendar shift regarding the New Year's Day holiday, but more importantly, severe winter storms hit large regions, primarily in the east coast, causing significant losses in restaurant sales later in the month."
 
The economy continues to grow solidly and tax cuts should be adding to the expansion soon, said Joel Naroff, president of Naroff Economic Advisors and TDn2K economies.

"That is both the good news and the bad news," he said. "Stronger growth in the 3 percent range looks likely this year and into 2019 as consumers spend the extra money in their paychecks and businesses increase their capital spending. But the added demand comes on top of an economy that was already good and labor markets were already tight. That has raised concerns wage and price inflation will accelerate and interest rates could rise higher and faster as a consequence."
 
Although sales were down, the report found that average guest checks grew by 3 percent year-over-year during January.This jump in check average also represents a substantial increase from the 2.3 percent reported for the fourth quarter of 2017, according to TDn2K.

The casual dining segment, which usually trails limited-service brands, lead the industry in guest check growth during the month. Fast casuals reported the lowest guest checks, while fine dining and upscale brands had the highest increases. They also were the only segments with positive sales in January. Casual dining has also seen a resurgence and was the third best-performing segment for the month, according to TDn2K.


Topics: Trends / Statistics

Companies: TDn2K


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