Is the Chain-Restaurant Recession Becoming Structural?
by Wolf Richter
WolfStreet.com
Jun 12, 2017
A 15-month downturn, longest since 2009, and no end in sight.
There’s simply no respite for chain restaurants. Industry-wide, same-store sales fell again in May. The last time, same-store sales actually rose year-over-year was in February 2016. On that basis, the chain-restaurant recession is now in its 15th month, the longest downturn since the Financial Crisis.
In May, same store sales fell 1.1% year-over-year. Same-store foot traffic fell 3.0%. Food sales were down, and alcohol sales were down, according to TDn2K’s Restaurant Industry Snapshot, tracking sales at 27,000 restaurant units from 155 brands, generating about $67 billion in annual revenue. But the average amount of the check per person increased by 2%, and not because they ordered more food and booze, but because prices rose.
Florida was the least bad region, with same-store sales up 0.1% and foot traffic down “only” 1.9%. Texas was the worst region with sales down 2.4% and foot traffic down 4.3%. Of the 196 markets, 140 (71%) experienced sales declines.
The report – as the reports in prior months – is perplexed by the long downturn:
Recently, there has been an upturn in retail spending on most goods and services. That stands in stark contrast to the continued decline in sales growth at restaurants.
This change in consumer spending patterns was identified about a year ago, and how much longer it will continue is unclear.
Now the hope is that year-over-year sales comparisons this year will look less bad based on the “relatively soft sales” last year. That has been the hope for months, and it hasn’t happened yet.
The Rest…HERE
