2019 ended on a negative note for the restaurant industry as it posted its worst month in over 2 years based on same-store sales growth. Although December's -2.1% sales growth was undoubtedly exacerbated by the shift in the Thanksgiving holiday, which was pushed into December according to Black Box Intelligence's reporting calendar, the month's sales were soft during all weeks of the month.
The results by the end of the year confirm what has been reported all year: restaurant sales experienced a slowdown year over year as traffic in comparable stores continues falling.
Not only is restaurant sales growth slowing down, but guests net sentiment is also waning year over year, a reflection of rising guest expectations that are not being met, a declining level of experience being provided by restaurants, or both.
Based on Black Box Intelligence during December, sentiment became less positive when guests rated the food and service they received from restaurants compared with the previous year. What is even more troublesome, given its correlation to sales and traffic, is that the biggest decline in sentiment year over year came from guests' stated intent to return.
Service has remained key to restaurant success over the last few years. Regardless of industry segment or service style, quarter after quarter guests have shown through their sales dollars and incremental visits that those restaurant companies that excel at service tend to be those doing better in the marketplace.
The latest Black Box Intelligence data revealed that during Q4 of 2019, service guest sentiment was the attribute that most differentiated top and bottom performing brands based on same-store sales.
Restaurants companies in the top 25% of same-store sales growth had a service net sentiment 17.4 percentage points more positive than those in the bottom 25% of sales growth. This spread in service scores reflects a substantially different perception in the service provided by those two sets of companies.
As clear as that relationship between service, sales and traffic may be, most restaurants are facing enormous challenges when it comes to recruiting and retention of employees that are negatively impacting the experiences they are able to provide their guests. Therefore, it comes as no surprise that those restaurant companies that have the highest sales growth rates (and much better service scores), also have substantially better employee retention.
During Q4 of 2019, those restaurants in the top quartile of sales performance had management turnover rates that were, on average, 7.7 percentage points lower than those with the worst sales growth results.
From a regional standpoint, even if weakening slightly year over year, the fact that all regions of the country have over 50% of all restaurant mentions rated as positive is definitely encouraging for the industry. However, only one region (Florida) was able to get over the 60% mark in terms of percentage of positive restaurant mentions.
As has constantly been the case over the last few years, regions where guests tend to rate their restaurant experiences less positively are New England and New York-New Jersey (the latter is despite the spike in positive sentiment seen during December in the New York DMA specifically).
The Restaurant Guest Satisfaction Snapshot is produced by data from Guest Intelligence™, a Black Box Intelligence Product™. Guest Intelligence is tracking over 192 brands to benchmark customer satisfaction and is the only online tool that integrates with operational performance data to validate the impact on financial performance. The algorithm determining ranking brands is based on sentiment and determined by White Box Social Intelligence. Brands included in this monthly snapshot must have a total of at least 250 mentions for the month. Restaurants must have a minimum number of units to be eligible as well. DMA rankings consider only the largest 25 areas.