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Industry skates on thin ice with menu price hikes

MillerPulse founder Larry Miller shares February sales highlights

Same-store sales for the restaurant industry rose a respectable +1.1% in February. The positive results may come as a surprise since other industry trackers have said industry sales fell for the month.

February was buoyed solidly positive sales in quick-service restaurants of 1.9%, which was more than enough to offset a -190 basis point nose dive in casual-dining sales to -1.6%. We suspect that casual dining will get a pass for its salty results since record levels of snowfall undoubtedly stunted sales in February. No argument here.

What’s concerning are the icebergs we see floating below the surface. Specifically, industry traffic and check are drifting dangerously in opposite directions.

Industry traffic hit a nine-year low at -4% in February while check averages touched a 10-year high. And, check increases have now accounted for more than 100% of sales growth for the last 26 months — that’s simply unsustainable in our view.

There’s one ray of sunshine. Check increases in quick service may have jumped due to more online and delivery orders due to the wintry weather and the Super Bowl.

The higher average ticket of delivery orders would be less problematic for future sales than more menu price, which is being taken to combat rising wages.

We understand the urge to raise prices, but it’s unadvisable given industry traffic has been negative since 2015. 

Larry Miller is the founder of MillerPulse, the largest US restaurant industry benchmark company, representing over 56,000 restaurant locations and over $85 billion in annual sales. MP is also the only tracker that covers all restaurant segments (i.e., quick service, fast casual, casual dining) and sub-segments (i.e., sandwich, chicken, grill & bar, etc).

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