As we close out the 2019 performance analysis at Black Box Intelligence™, I want to add some color to the flat comp sales results of +.01% for the industry in 2019. The negative traffic growth of -3.1% was made even more disappointing given that check average was increased by 3.2%. So, how could I say restaurants are doing well?
If your brand is in the top quartile of Black Box Financial Intelligence sales and traffic, composed of 33,000+ weekly reporting units of 185 brands and annual sales of $75 billion revenue, you are doing well. As a matter of fact, you are doing well no matter what segment in which you are doing business. At Black Box Intelligence we are focused on more than the medium or average results. We want our clients to know top quartile results and what they do differently, I think this is the untold story.
Top quartile gap in comp sales versus the bottom quartile was an impressive 8.1% in sales and 8.0% in traffic. The only positive traffic is in that top quartile, which is very telling in itself. This gap continues to grow as it is the classic story of the strong getting stronger and you know the rest. Another interesting data point is check growth. The top quartile took 3.2% in price and the bottom took 3.1%, meaning the top can offset their cost without losing traffic. However, for the rest of the pack, the pricing necessary to cover wage cost alone is at the expense of traffic. It seems we have become numb to the effects of negative traffic, but the top performers are not.
Why do some brands excel while others don’t?
First let’s dispel some myths. It is not the age or segment of the brand as we find the top performers at different stages of the lifecycle and multiple segments in top and bottom quartile. It is not the location of the brand as we find brands in all regions. It is not the size of the brand as top performers are a mix of big national brands and small regional brands. Finally, it’s not the same brands every year. We see brands improve and decline over time which means leadership and strategy matters.
The common question is why do they do well? We have some great insight into this question from studying years of data across our financial, workforce and guest satisfaction platforms. The top line is that the service profit chain is still alive and well for our top quartile performers. We see in our Black Box Workforce Intelligence data on 2.8 million industry employees in 180+ brands that those brands tend to have a double-digit gap in employee and management retention in the war in staffing and talent. This is a big deal as it is the most difficult issue operators are facing. As a result, because they do a better job in retention and staffing, we see in our Black Box Guest Intelligence data tracking 200+ brands a clear difference in service and operational execution scores in top quartile brands. These differences are leading these brands to achieve a real difference in the intent to return scores which is why they are positive in traffic!
So, are restaurants doing well?
Yes, for the brands winning in attracting, retaining and developing talent.
Yes, if that staff delivers service and operational execution that is often an unexpected delight to our jaded guests accustomed to enduring the service and operations faults delivered by the average and below average brands.
Yes, to the brands that are focused on a strategy ingrained in attracting the younger workforce and guests that want a sense of purpose in the brand along with the expected product and service execution.
The old story that data doesn’t lie is relevant here as well.
Average is just not good enough!
Congratulations to the 2019 top performers many of which we will recognize in our 25th annual Global Best Practices Conference in two weeks.
Happy New Year!
Chairman and Co-Founder