The restaurant industry had its best month in over 4 years based on its same-store sales growth in January. However, the strength in the month's sales can be largely attributed to an unusually warm January, which seems to have motivated consumers (particularly in those regions of the country typically hit the hardest by severe winter weather) to spend more on dining out during the month. Same-store sales growth was 2.3% in January according to Black Box Intelligence™.
However, even with these favorable weather conditions, same-store traffic remained negative for the month at -0.7%. Although negative, this represented a significant improvement over recent month's traffic results.Meanwhile, these results were accompanied by guests expressing a more positive sentiment in one key attribute of the restaurant experience: service. Compared to a year ago, a larger percentage of online restaurant mentions and reviews expressed a positive service guest sentiment during January of 2020. Also, for the first time since September of 2019, over 50% of all service-related mentions were classified as positive. Given that the service attribute has most consistently differentiated top performing brands in the marketplace in recent years (more than food, beverage, ambiance or value), an increasingly positive service sentiment is good news for restaurants. Even if service sentiment improved, January experienced a continuation of the ongoing trend for food sentiment becoming slightly less positive year over year. This could be a matter of guest expectations becoming stricter when it comes to restaurant food or restaurants simply not executing properly. Additionally, the effect of an increasing portion of the restaurant business now going towards off-premise meals and delivery may also be playing a part. Not surprisingly, according to Black Box Guest Intelligence data, food quality guest sentiment tends to be much lower for delivery and to-go than it is for dine-in meals.
For the last 10 years, chain restaurants have faced a persistent erosion in their guest counts year over year. With established restaurants adding locations at an accelerated pace and new brands coming into the marketplace continuously, the restaurant industry is over-built and restaurant visits are diluted over a larger base of possible options. Although the norm is for restaurant brands to see declining traffic growth, there are some that are bucking the trend and growing their guest counts. The latest Black Box Intelligence research on “The Best” performance brands revealed there are restaurants that have been able to consistently grow their traffic over the last 2 years. These brands that achieved positive traffic growth last year outperformed the rest of the industry by 4.4 percentage points in their same-store sales.
Upon a deeper dive into what these brands are doing to set themselves apart, an interesting finding emerged. Those restaurant brands growing their guest counts are much better at providing a well-rounded, overall experience to their guests. When measuring the guest net sentiment around the restaurant "experience,” restaurants with positive traffic growth outperformed the rest of the industry by a significant 19 percentage points. This suggests that regardless of industry segment and service style, guests will likely reward a superior experience with incremental restaurant visits and dollars spent.
Restaurants operating in 3 regions of the country achieved over 60% of guest reviews and mentions classified as positive during the month. These 3 regions with the highest restaurant guest sentiment were Florida, the Western region and Texas.
California, New England and New York-New Jersey were the regions with the lowest restaurant guest sentiment. The 2 latter regions are frequently mentioned as having the guests with the lowest sentiment when referring to their restaurant experiences. The fact that competition is fierce in these regions and consumers have many options to choose from when it comes to food-away-from-home (both from chain and independent restaurants) could be the factor leading to higher expectations that are harder to meet than in other parts of the country.
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.