Restaurant industry same-store sales in March remained consistent with gains posted in February, but operator outlook improved to its highest level as restaurant operators expect a strong April, according to the latest NRN-MillerPulse survey.
Industry same-store sales increased 4.2 percent in March, compared with the near-identical 4.3-percent gain reported in February, the survey found. Quick-service restaurants, which include both fast-casual and fast-food brands, continued to drive positive sales trends, hitting an all-time high for the survey with a 6.9-percent increase, compared with the previous record of 6 percent set the month prior.
MillerPulse, an operator survey exclusive to Nation’s Restaurant News, included respondents from 64 restaurant operators in April regarding March sales, profit trends, performance and outlooks. Respondents included operators from all regions of the country that represent the quick-service, casual-dining, fine-dining and fast-casual segments. Those surveyed in April represented restaurants that booked about 5 percent of industry sales.
Full-service restaurants, which include both casual-dining and fine-dining brands, decreased since February but still remained positive. The segment reported a 1.2-percent gain in same-store sales in March versus a 2.3-percent gain in February. Fine-dining brands posted the most significant increase in sales, with 5.6 percent, compared with the modest 0.4-percent gain from casual-dining brands.
“We're seeing an interesting barbell sales trend with strength at the lower end and higher end of the dining spectrum,” said Larry Miller, restaurant securities analyst at RBC Capital Markets and creator of the monthly MillerPulse surveys. “I think it shows an economy which is indeed recovering but still fragile. Fast food is benefiting as the middle-income consumer is trading down for better value and the positive jobs momentum is giving foot traffic a lift. The strong results at fine dining show the business customer and higher-end consumers are spending more freely, too.”
A net 32 percent of all operators surveyed expect sales to be better in April than they were in March. That number was calculated by the 48 percent of operators that thought sales would be better versus the 16 percent of those that felt that sales would worsen.
Despite the quick-service segment’s strong sales figures and record traffic for the survey — the segment reported a 4.6-percent increase in traffic in March — full-service restaurants are the most optimistic looking forward. A net 52 percent of full-service operators think sales trends will improve in April, while only a net 17 percent of quick-service operators felt that same way.
Miller noted that confidence among full-service restaurants, particularly casual-dining brand, could be attributed to improving trends towards the end of the month.
“Casual-dining operators are optimistic about April sales as they, generally speaking, saw better trends towards the end of March and presumably into early April,” he said.
Favorable weather and an improving economy remain the primary factors that operators attributed to improved sales. That being the case, operators are divided on whether positive sales trends are sustainable, with 43 percent saying they are and 57 percent believing they are not.
However, with other reasons besides weather being cited among operators as sales drivers, Miller thinks that sales trends stand a good chance of remaining strong going forward.
“I'm in the camp that says the solid restaurant industry sales trend is more than just good weather; it's reflective of underlying positive momentum in the economy,” he said. “Some operators seem to agree as they cite improving consumer confidence, lower unemployment and a better economy as being behind the uptick in same-store sales. If we're right that the economy is on the mend then sales could remain strong for the balance of the year.”
Register for MillerPulse at www.nrn.com/industry-insight.
Contact Charlie Duerr at [email protected].