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Restaurant Industry Snapshot™ April, 2018

Long-Term Recovery? Best Restaurant Industry Sales in Almost Three Years During April


Watch a short video commentary on this month’s snapshot from Michael Harms, Vice President of Operations.

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Comp Sales & Traffic

Comp Sales

rolling 3 months

Comp Traffic

rolling 3 months

There were plenty of good news in the April results. Same-store sales growth was 1.5 percent, which represented a 0.7 percentage point increase from March’s results. This was the best month for the industry since September of 2015 based on sales growth. Additionally, when calculating same-store sales growth on a two-year basis, April saw small positive growth. This had only happened once before during the previous 18 months and could signal that the industry may be entering into a period of long-term recovery. However, even with all of these positive results, restaurants experienced a -1.4 percent growth in their same-store traffic during April. The underlying issues of restaurant oversupply and increased competition from outside the chain restaurant sector still prevail and will likely haunt the industry for the rest of the year.

Regional & Market Performance

Positive Markets 147 | 75% Negative Markets 49 | 25%

Strongest Region

  • Sales 2.5%
  • Traffic 0.6%

Weakest Region

  • Sales -0.2%
  • Traffic -2.9%

April’s strong same-store sales growth was widespread across the country, with ten of the eleven regions posting positive sales growth during the month. The best performing regions of the country during the month were the Southeast, Mountain Plains, the Southwest and the Western region. The only region that experienced negative same-store sales growth during the month was Florida. And with sales growth of -0.2 percent, even this region did relatively well during the month. At a more granular market level, the strength of restaurant sales during April also becomes evident. Of the 196 DMAs currently covered by Financial Intelligence (formerly Black Box Intelligence), 147 (or 75 percent) achieved positive same-store sales growth. As a comparison, only 61 percent of markets were able to post positive sales growth during March.

The Restaurant Workforce

job growth & turnover

Year/Year Job Growth*


Manager Turnover*

Q1 '18
Roll 12

Hourly Turnover*

Q1 '18
Roll 12
*Black Box Workforce Intelligence, March, 2018 Release

Retention of restaurant hourly employees and managers continues to be top-of-mind for restaurant operators. With the unemployment rate falling under 4.0 percent for the first time since 2000, it is easy to understand why. Most restaurant brands say they are continuously understaffed. However, even if turnover rates for restaurants remain at historically high levels and are likely to remain troublesome, there was some good news in the latest results. Rolling 12-month turnover rates dipped slightly during March and could be signaling that the rise in turnover rates has peaked.


Long-Term Recovery? Best Restaurant Industry Sales in Almost Three Years During April


The restaurant industry produced encouraging top-line results in April. The 1.5 percent same-store sales growth is the strongest in the last 31 months. For perspective, the industry hasn’t recorded seven consecutive weeks of positive sales growth since December of 2015. These insights come from Financial Intelligence (formerly Black Box Intelligence), a Black Box Intelligence (formerly TDn2K) company, data through The Restaurant Industry Snapshot™, based on weekly sales from over 30,000 restaurant units, 170+ brands and represent over $69 billion dollars in annual revenue.

“We are seeing an uptick in restaurant revenue beginning with the fourth quarter of last year,” stated Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence (formerly TDn2K). “Stronger economic conditions and high consumer confidence are certainly factors. However, this performance has to be considered against last year’s soft sales. A longer view suggests there are still significant challenges for the industry.”

However, with same-store sales positive over a two-year period in April, it could be an early signal that the industry is more vibrant and is showing signs of returning to consistent positive comp performance.

As for bad news, it is impossible to ignore the fact that positive sales come from increases in average check while guest counts continue to slide. Same-store traffic was down -1.4 percent in April. Even though this was the best month based on traffic in over two years, it highlights the fact that stopping the erosion in guest traffic remains the industry’s number one priority.


Restaurants Should Continue to Get Fair Share of Tax Cuts

“Though first quarter growth was somewhat disappointing, the reality is that the economy is growing solidly and should continue to do so,” explained Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence (formerly TDn2K) economist. “While wage increases are still not robust, they have been improving and the gains from the tax cuts will continue to trickle through to households for the rest of the year.”

“That personal income is rising modestly, rather than surging, could help the restaurant industry. Households have enough additional funds to spend on a night out, but not enough buy big-ticket items. Thus, we are seeing a slowdown in vehicle purchases while demand for soft-goods and eating out is holding up well. Restaurants should continue to get their fair share, if not more, of the tax cuts. However, the limited portion of the tax cuts going to low and middle-income households points to only a moderate rise in demand going forward.”


Check Growth Continues to Accelerate

Beginning in mid-2017 and continuing into 2018, we’ve observed an increase in average check. Year-over-year growth in average check was 3 percent or higher during the last two months compared with 2.4 percent for the last quarter of 2017.

Black Box Intelligence (formerly TDn2K) research has shown that top performing restaurant brands grow average checks at a higher rate than underperformers. There is evidence that top performers have established a value proposition that allows them to pass along cost increases associated with higher operating expenses, especially labor.


Opportunity Areas for Restaurants: Off-Premise and Beverage Sales

Another consistent trend is off-premise consumption outpacing dine-in sales. In April, to-go, delivery, catering and banquet sales each outperformed sales growth for dine-in sales. Across industry segments, the percentage of total restaurant sales represented by these off-premise food categories has been growing. Consumers behavior is shifting and “on-the-go” has become an extremely important component of restaurant demand.

Also noteworthy during April was the robust growth in same-store beverage sales. This month’s beverage sales growth was the highest in over 30 months. This is another important metric to follow in the near future. Black Box Intelligence (formerly TDn2K) studies have revealed guests of both full-service and limited service restaurants really value beverages (either alcoholic for full-service restaurants or soft drinks for limited service brands) as part of their restaurant experience. According to Black Box Intelligence (formerly TDn2K)’s Guest Intelligence (formerly White Box Social Intelligence) data, top performing brands based on sales growth tend to have a much more positive guest sentiment based on beverages than underperforming brands.


Recovery Continues for Casual Dining and Fast Casual

Fast casual, casual dining and upscale casual were top performers in the month. Fast casual and casual dining continue to see a resurgence after years of underperformance. Both of these segments have year-to-date positive same-store sales growth and are the segments with the biggest improvement in sales growth so far in 2018 compared with the previous year.


Soaring Turnover Rates May Have Peaked

The national unemployment rate fell under 4.0 percent for the first time since 2000, reminding restaurant operators of how challenging the current environment is. But recent results published by Black Box Intelligence (formerly TDn2K)’s Workforce Intelligence (formerly People Report) reveal that the skyrocketing turnover rates may have reached their peak and now have started to stabilize and even drop slightly. “As with sales growth, these drops in the turnover rate have to be taken in context,” said Fernandez. “Turnover falling a few percentage points does not necessarily mean we’ve reached an inflection point. Turnover rates for both management and non-management employees are still the highest we’ve seen in well over a decade. We expect turnover rates to remain extremely high in today’s low-unemployment environment. Vacancy rates also remain historically high.”

“There is definitely a reward for getting better-staffed restaurants,” continued Fernandez. “Our data shows in the first quarter of 2018, guests’ online mentions revealed that service is a more important differentiator than food. Nowadays, consumers can get a meal from many different sources. But they are saying that service is a key driver of their experience.”


Black Box Intelligence (formerly TDn2K) is the parent company of Workforce Intelligence (formerly People Report), Financial Intelligence (formerly Black Box Intelligence) and Guest Intelligence (formerly White Box Social Intelligence). Workforce Intelligence (formerly People Report) provides service-sector human capital and workforce analytics for its members monthly. Financial Intelligence (formerly Black Box Intelligence) provides weekly financial and market level data for the restaurant industry. Guest Intelligence (formerly White Box Social Intelligence) delivers consumer insights and reveals online brand health. Black Box Intelligence (formerly TDn2K) membership represents 43,000+ restaurant units, 2.5 million employees and over $69 billion in sales. They are also the producers of leading restaurant industry events including the Global Best Practices Conference held annually each January in Dallas, Texas.

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