Restaurant industry same-store sales were up in May, with quick-service chains continuing to outperform the full-service segment, according to the latest NRN-MillerPulse survey.
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MillerPulse, an operator survey exclusive to Nation’s Restaurant News, included respondents from 53 restaurant operators in June regarding May 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 June represented restaurants that booked about 14 percent of industry sales.
Industry same-store sales rose 3.1 percent in May compared with a 2.3-percent increase in April, the survey found. Quick-service restaurants, which include both fast-food and fast-casual brands, had another strong month, with a sales increase of 4.5 percent in May, compared with a 3.7-percent increase the month prior. Full-service restaurants, which include both casual-dining and fine-dining brands, saw a modest increase of 1.7 percent in May compared with a 1.3-percent gain in April. Casual-dining brands continued to struggle, with same-store sales rising 1 percent and guest traffic falling 0.9 percent, the survey found.
However, full-service restaurants’ unremarkable month is not necessarily indicative of the health of the industry as a whole.
“There's a misconception that the industry is slowing. It's not. Only parts of it are — casual dining,” said Larry Miller, restaurant securities analyst at RBC Capital Markets and creator of the monthly MillerPulse surveys. “Sales trends for fast-food and fast-casual companies are holding up very well. So it's not surprising to me that the sales outlook for QSR companies is much better than casual dining.”
Miller referred to the net 27 percent of quick-service operators who say sales will improve in June, as opposed to only a net 22 percent of full-service operators that feel the same way. Those figures were calculated by subtracting the percentage of operators who felt sales would get worse in June from the percentage that felt they would get better.
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The six-month outlook was less optimistic, the survey found. Operator outlook across all four segments — fast food, fast casual, fine dining and casual dining — worsened in May compared with April, with the majority of them citing the economy as their chief concern, as opposed to weather and commodity pressures, which had been the case in months prior.
“They [operators] are now citing the economy as the No. 1 business concern,” Miller said. “I agree with them that a weaker economy would be the biggest threat as it mean weaker sales trends going forward, and that's likely the driving force behind the souring sales outlook.”
And as the economy continues to present a problem, Miller expects the trend of quick service outperforming other segments to continue. He partly attributes this to an improvement in quality at restaurants in that segment.
“There is a structural shift as the quality of the total offering — food and ambiance — at QSR is similar if not better than low-end casual dining, and the price is advantageous.”
Register for MillerPulse at www.nrn.com/industry-insight.
Contact Charlie Duerr at [email protected].