Out of the Box: March 2025
In This Issue:
- The Big Picture: Sales and Traffic Trends
- March 2025 Restaurant Industry Performance Trends In Detail
- Segment Focus QSR: Current Performance Trends
March 2025 Restaurant Industry Trends
The Big Picture: Sales and Traffic Trends
As expected, there was a rebound for the restaurant industry in March.
But this is compared with very weak February results.
There were also some key drivers.
Average temperatures during the last two weeks of the month were much warmer than they were a year ago. And four of the five weeks had favorable YOY temperature comparisons during March.
Additionally, gas prices have helped consumers since the beginning of March. The average gas price for the month was 8% lower than it was during the same month last year.
Despite the acceleration in restaurant sales and traffic during March, restaurant sales and traffic growth was – overall – softer during Q1 2025 than during the last quarter of 2024.
Same-store sales growth was 0.3% during the first quarter of 2025, while Q4 of 2024 posted sales growth of 0.9%. For same-store traffic growth, the -3.0% experienced in Q1 represented a sharp drop from the -1.7% reported for Q4 2024.
When we dig a little deeper, it’s pretty clear that most industry segments struggled during March.
It was only Casual Dining and Fast Casual that were able to post positive same-store sales growth.
| Month | Apr. ’24 | May ’24 | Jun. ’24 | Jul. ’24 | Aug. ’24 | Sept. ’24 | Oct. ’24 | Nov. ’24 | Dec. ’24 | Jan. | Feb. | Mar. |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Comp. Sales | +0.6% | +0.4% | -0.1% | -2.3% | -0.4% | +0.4% | +0.5% | +2.8% | -0.3% | +2.5% | -2.5% | 0.9% |
| Comp. Traffic | -2.3% | -3.1% | -2.8% | -4.6% | -3.6% | -2.7% | -2.5% | +0.9% | -3.2% | -1.3% | -5.7% | -2.2% |
March 2025
Restaurant Industry Trends In Detail
Every month, BBI provides a big picture update on sales and traffic in our Out of the Box series. But we also dive deeper into specific pockets of what we’re seeing in the industry to provide deeper insight into workforce, segment and guest sentiment trends.
Segment Performance Deep Dive: Casual Dining Rebounds
There has been a resurgence in Casual Dining in recent months.
Based on same-store sales growth during March and the last two quarters, the segment is the top performer. This is a far cry from the doom and gloom it seemed to consistently attract last year.
Overall, we are seeing strong willingness of guests to spend their money at Casual Dining restaurants. And despite the headlines about bankruptcies and unit closures, the segment is far from being a thing of the past.
That being said, there is a wide range of performance within the segment. Not every brand is enjoying the same level of success. In fact, two thirds of all Casual Dining brands tracked by Black Box Intelligence had negative same-store sales growth during March. And of those with negative sales growth, their same-store sales fell by an average 6.9% during the month.
The segment with the weakest same-store sales growth during March was Fine Dining. But this was not really due to a big drop in upscale dining during the month, as the economic outlook became less optimistic or the stock market fell relative to February. The biggest driver in the segment’s under-performance was the shift in the Easter holiday.
Easter was celebrated during March in 2024, but fell in April for the current year. In the case of the Fine Dining segment, the holiday represents a boon in sales during that week. Missing those extra dollars from March last year meant a sharp decline in sales growth for 2025. If same-store sales growth are calculated for Fine Dining excluding the week of Easter, the segment’s performance would put them in third place in March. That’s only behind Casual Dining and Fast Casual.
Best vs Worst: Region, Segment, and Cuisine [YOY same-store sales growth]
March was a relatively strong month for restaurants throughout the country.
Only three regions experienced negative same-store sales growth: California, the Western region, and New York-New Jersey. This is compared to the previous month, in which all regions saw their sales decline year over year.
New England is the best-performing region based on same-store sales and same-store traffic growth. It was the only region able to achieve positive year-over-year traffic growth during the month.
This region has been enjoying some strong restaurant performance recently. It is topping the country based on sales growth during five of the last six months. Only February saw the segment slip.
On the other end of the spectrum, we find California. California saw a drop in restaurant sales growth during March. It was the country’s only region with worse same-store sales growth in March compared to February. The segment has seen its sales performance decline over the last eight months. Back in August and September, it was the best performing region in the country.
Segment Focus
Upscale Casual: Current Performance Trends
The sales performance for Upscale Casual brands can be described as being in the middle of the pack.
| Same-store sales growth = -0.2% |
|---|
| (Jan-Mar 2025 vs. Jan-Mar 2024) |
Over the last nine months, the segment hasn’t delivered a top-two or bottom-two segment performance on same-store sales growth.
This can be explained – from what we see in our data – as being the result of guests trading down to lower-priced restaurant options as a result of high inflation.
These trade downs are mainly Family and Casual Dining to Quick Service and Fast Casual.
Looking at broader economic conditions recent data shows that the percentage of high income consumers reportedly living paycheck-to-paycheck is rising.
That’s 20% of people earning $150K or more a year who reported spending more than 95% of their income on necessities. And the percentage is even higher for those making between $100-$150K a year.
Given these external pressures, it’s only natural that some trade downs are also happening from Upscale Casual too. Maybe not to the same level, but it seems unlikely that there is not at least some impact.
What we think is happening: typical Upscale Casual consumers are most probably frequenting those brands for some – but not all – their meals – and instead seeking out more budget-friendly options in those instances.
Staffing, Workforce and Employment Focus Full Service Restaurants: Turnover Trends
| Hourly, Non-Management Turnover |
|---|
| Down 28 percentage points YOY |
| Down 4 percentage points QOQ |
| (Based on rolling 12-month turnover rates) |
Staffing challenges are easing for limited service restaurants, with turnover for hourly, non-management employees falling at a rapid pace during the last year. Turnover rates for this sector of the industry (which includes Quick Service and Fast Casual restaurants) are now lower than they were back in 2019, before the pandemic-induced crisis led to skyrocketing turnover and wage growth for restaurants.
Data as of the end of February shows that rolling 12-month turnover for hourly, non-management employees in limited service restaurants has dropped by a massive 28 percentage points compared to the same quarter a year ago.
Why is this important? The simplest answer is that our analysis repeatedly has revealed the connection that exists between employee retention and better restaurant execution, which leads to higher guest sentiment and superior guest traffic results.
The Q1 2025 data once again shows that those restaurants with the lowest turnover rates tend to be rated much more positively by their guests on key attributes of the restaurant experience, such as the food they are serving, the service they provide and the ambiance their guests enjoy when visiting their establishments.
BBI Says
Economists and, more importantly, consumers have become increasingly worried about the economic outlook in the last two months. Economists’ consensus seems that the chances of a recession are increasing rapidly. And even if we don’t fall into recession? The forecasts show a slowdown in economic growth this year, starting with a sharp decline in Q1.
“Reluctantly, we’ve had to become much less optimistic about restaurant performance in 2025, with our forecasts shifting downwards over the last month”, said Victor Fernandez, Chief Insights Officer for Black Box Intelligence.
“One of the biggest fears from a tariff-induced trade war is the effect it can have on accelerating inflation, and it is proving hard to predict what will be the effect of those tariffs given that it is not clear how deep or widespread they will actually be. It is also unclear how long will they last at elevated levels….
…But what our data shows is that different segments of the restaurant industry will face disparate effects as a result of the potential rising inflation. Our analysis shows that Fast Casual and Quick Service may benefit from an acceleration in their guest traffic growth in a rising inflation scenario, while the biggest negative impact on guest traffic is expected in Family and Casual Dining.”
The effect is expected to be small on Upscale Casual and almost null for brands operating in Fine Dining.
Conclusion
As expected, March 2025 restaurant industry trends show a strong rebound compared to February.
The improvement comes with reservations regarding optimism for the industry.
While some segments showed signs of strength, the industry continues to face headwinds.
Encouragingly, staffing challenges- especially in Limited Service- are easing. With turnover dropping significantly, it bodes well for improving guest experiences. This leaves a big opportunity for restaurants to win.
Looking ahead? The industry’s resilience will hinge on how brands can navigate economic pressures. March offered reasons for cautious optimism. We’ll continue to dig deeper to help the industry understand performance dynamics.
And stay up-to-date using resources like our Out of the Box and our Quarterly State of the Industry to navigate what’s next for 2025.
For Deeper Analysis
Quarterly SOTI Webinars
Our Out of the Box Monthly Updates provide high level trend analysis. We go into way more detail in our flagship quarterly State of the Industry (SOTI) webinar – our definitive take on the latest developments and a must attend for anyone in the restaurant industry.
