Restaurant industry reports slow second quarter

by The City Wire staff ( 5 views 

The restaurant segment continues to see sluggish activity throughout the second quarter and first half of 2014. The industry’s snapshot for June showed same-store sales were flat at 0.3% during the second quarter. While not great by any means, it was a 0.5% improvement over negative comps reported in the first quarter.

“Even without the weather-related constraints, same-store sales growth for the quarter was pretty lackluster;” said Victor Fernandez, executive director of insights and knowledge for Black Box Intelligence.

Expectations are for a stronger second half of the year from a same-store sales growth perspective, considering that same-store sales were negative during the back half of 2013 creating lower hurdles in 2014.

Black Box reports that on a two-year basis, sales in comparable stores grew by about 1.2% during the second quarter, while guest checks have grown at an average of 2.1% for all months during this same two year period.

“The sales growth we are observing is not reflecting the full price increase amounts that brands have likely taken during the last two years given the growth in average check”, Fernandez said. “The barrier continues to be the declining guest counts experienced by the industry.”

Comparable traffic one again was negative during the second quarter at -1.4%, but it was still the strongest result for the industry since the second quarter of 2013.

The industry has yet to post a quarter of positive same-store sales traffic since the recession. On a two-year basis, same-store traffic dropped by about 2.7% when compared with second quarter of 2012, further illustrating the chain restaurant industry’s main problem.

Fernandez cites several reasons for weaker traffic, as consumer incomes are not growing as fast as inflationary food prices, a shift in consumer preferences and slow improvement in the labor market.