News

Shake Shack, Domino's leading restaurant industry

Q3 same-store sales improved across all segments of the restaurant industry, according to BDO's benchmarking update.

December 7, 2015

Q3 same-store sales improved across all segments of the restaurant industry, according to BDO's benchmarking update. Pizza and fast casual segments enjoyed the most significant growth, with an increase of 6.7 percent and 5.6 percent, respectively.

BDO, which compiles the operating results of publicly traded restaurant companies four times a year, reported Domino's continues to lead the pizza segment for the fourth quarter in a row with a 13.3 percent increase in same-store sales through Q3. It has sustained this growth as a result of focusing on online ordering and improving the digital customer experience.

Shake Shack is still leading the fast casual segment with a 14.3 percent increase in same-store sales, according to the report. The brand's positive same-store sales is due to an increase in menu prices and an uptick in store traffic from the buzz surrounding the brand's IPO in January. Same-store sales are approximately 10 percent higher than in fiscal year 2014.

Commodities coming down

Another positive sign for the industry, according to BDO, is the cost of sales decrease across most segments through Q3. This change is largely due to lower commodity costs. The pizza segment continues to reap the greatest benefit since cheese, wheat and pork prices have all declined.

Labor costs

Despite increases to minimum wage, many restaurants are maintaining consistent labor costs through a combination of improved sales and effective labor management, according to BDO. However, the pizza segment is an exception as it has seen labor costs rise through Q3. This change can be attributed to Domino's 1.3 percent increase in labor costs over the prior year as its strong sales growth triggered higher labor costs in the form of overtime and bonuses.

Also, restaurants continue to monitor the impact of the Affordable Care Act to ensure they have implemented an effective strategy to address the associated costs and comply with reporting requirements.