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Restaurant operators sour on same-store sales

The new NRN-MillerPulse survey looks at summer trends, future expectations

The latest MillerPulse survey, which tracks restaurant sales and operator sentiment, showed for the first time in the survey’s nearly three-year history that more operators expect August same-store sales results to be worse than July.

The pessimism was palpable throughout the August MillerPulse survey, which collected data during the second week of August from more than 100 restaurateurs across the country at brands representing about 20 percent of total industry sales. Respondents cover all restaurant segments and all geographic areas in the United States. The August survey covers July results and outlooks for the remainder of the year.

Most key business aspects were labeled unfavorably by survey participants, including access to credit, guest traffic, pricing power and food costs — each of which deteriorated in the eyes of operators in July from earlier months. Economic worries also supplanted commodities as operators’ top concern. The majority of operators, or 51 percent, said the U.S. debt issues and subsequent stock market volatility directly hurt restaurant sales.

Looking into August, most operators expect declining same-store sales trends, with a net negative 8-percent result to the survey, which tracks the number of respondents who said sales would be “better” minus the number of respondents who said sales would be “worse.”

A comment from a surveyed operator – who will remain anonymous, as individual results and survey names are not released – summed up the mood:

“Consumer confidence is at recessionary levels. Dollar is getting weaker. Demand from consumers is going down, while input costs are increasing. Dangerous mix,” the operator commented.

MillerPulse is a monthly survey jointly produced by Nation’s Restaurant News and Larry Miller, a restaurant securities analyst at RBC Capital Markets in Atlanta. Miller has been producing this industry benchmark report for nearly three years. NRN now offers its readers the chance to participate and receive the exclusive data each month. More information and register.

May, June, July results
April results

“For the first time in the history of this survey, more operators are expecting next month’s comps to be worse [32 percent of respondents] than better [24 percent of respondents],” Miller said. “And, operators’ six-month comp outlook also soured, with two of the four sectors [casual- and fine-dining] expecting worse sales than current trend.”

The month-to-month look at industry same-store sales shows July results rose 2.1 percent, sequentially down from 2.6 percent in June and 2.5 percent in May. Year-over-year, same-store sales increased from 0.5 percent in July 2010.

Both quick-service and casual-dining restaurants reported positive traffic results in July, up 0.8 percent at quick-service and 0.2 percent at casual diners. The rate of positive traffic fell June levels.

Additional takeaways:

• All six average check measures the survey tracks slipped in the latest survey, re-establishing the trend in average check management by guests that began four months ago. On the plus side, average check indicators remained positive and guest traffic rose, albeit 0.5 percent in July, down from the 1.3-percent June gain.
• Four of the five dayparts tracked declined in July, and three of the five dayparts are in negative territory. Morning business showed the only improvement.
• Rates of menu pricing remained steady in July, with operator respondents expected to run a rate of 1.5 percent pricing for the next six months, which is flat from expectations in last month’s survey. Operator commentary showed many are more cautious now on price increases because of sensitive consumer sentiment.

Contact Sarah Lockyer at [email protected].
Follow her on Twitter: @slockyerNRN

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