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Restaurant Industry Snapshot™ August, 2018

Best Restaurant Industry Sales Growth in Nearly Three Years; Hurricane Harvey a Factor


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Comp Sales & Traffic

Comp Sales

rolling 3 months

Comp Traffic

rolling 3 months

August was a strong month for restaurant same-store sales, which had the highest growth rate recorded since September of 2015. Sales growth was 1.8 percent during the month, undoubtedly aided by the industry lapping over the first week of Hurricane Harvey that affected the Texas coast in 2017. However, sales during the first three weeks of the month (before the hurricane hurt sales last year) indicate that the month would probably have been one of best (if not the best) in over two years even without the boost from the easy comparison. Strong sales result notwithstanding, the industry continues to suffer from guest count erosion. Same-store traffic growth was -0.8 percent during August.

Regional & Market Performance

Positive Markets 143 | 73% Negative Markets 53 | 27%

Strongest Region

  • Sales 4.05%
  • Traffic 1.57%

Weakest Region

  • Sales 0.65%
  • Traffic -1.71%

Restaurant sales were strong across the country during August. Altogether the eleven regions posted positive same-store sales growth, providing evidence that the month’s strong performance was not only due to the soft comparisons in some areas attributed to the bad weather last year. However, the best performing region based on sales growth during the month was Texas with a 4.1 percent growth rate, obviously boosted by Hurricane Harvey’s negative effect on restaurant sales. Furthermore, at the market level, 143 (73 percent) of the 196 DMAs tracked by Financial Intelligence (formerly Black Box Intelligence) achieved positive same-store sales growth during August. As a comparison, only 61 percent of individual markets reported positive sales growth during July.

The Restaurant Workforce

job growth & turnover

Year/Year Job Growth*


Manager Turnover*

Q3 '18
Roll 12

Hourly Turnover*

Q3 '18
Roll 12
*Black Box Workforce Intelligence, July, 2018 Release

Keeping restaurants fully staffed is among the key challenges faced by operators today. According to Black Box Intelligence (formerly TDn2K)’s Workforce Intelligence (formerly People Report), July provided some relief in the form of declining turnover rates for both restaurant managers and hourly employees. This improvement in retention notwithstanding, Workforce Intelligence (formerly People Report)’s latest Workforce Index revealed that 74 percent of restaurant brands experienced increased recruiting difficulty for their hourly employees during the last quarter. 59 percent of brands said recruiting for restaurant managers is becoming more difficult. A factor behind this increased recruiting difficulty is that the industry continues to expand. The number of chain restaurant jobs has increased by 1.7 percent year over year during the last two months.

Best Restaurant Industry Sales Growth in Nearly Three Years; Hurricane Harvey a Factor

The restaurant industry continued its recovery in August. Same-store sales were up 1.8 percent, making it the best month since September of 2015. However, Hurricane Harvey hit the Texas coast in August last year, greatly impacting sales in the last week of that month, giving restaurants a built-in advantage. That soft comparison resulted in same-store sales growth of 2.9 percent for the last week of August 2018. These insights come from Black Box Intelligence (formerly TDn2K)’s Financial Intelligence (formerly Black Box Intelligence) data, based on weekly sales from over 30,000 locations representing 170+ brands and nearly $70 billion in annual sales.

“Regardless of the hurricane impact, it is important to highlight that sales were strong in August,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence (formerly TDn2K). “At the end of July there was concern that restaurant sales might be slowing and the much-awaited recovery might be coming to an end. Nonetheless, sales in the first three weeks of August, which were pre-hurricane, were up 1.5 percent. Had this been the final result for the month, it would still have been the best performance since September of 2015 and it represented a 0.9 percentage point improvement over July’s same-store sales.”

Despite Sales Recovery, Restaurants Continue to Lose Guests

Same-store traffic was down -0.8 percent in August. It is telling that the industry posted the strongest result in the last three years, but it was not enough to escape the continued slide in guest counts.

As with sales, traffic comparisons were also aided by the hurricane. Traffic for the first three weeks of August, a reasonable representation of the month’s traffic performance, dipped -1.2 percent. Although not particularly strong (April’s traffic growth was better), this represents a 0.5 percentage point improvement over July.

Economic Growth Robust, But Consumer Spending May Begin to Moderate

“There are few signs that the economic upsurge will slow sharply anytime soon,” predicted Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence (formerly TDn2K) economist. “Manufacturing activity is strong and businesses are starting to spend their soaring after-tax profits.”

“The measured wage gains remain modest, but that does not mean employees aren’t doing better. Firms are increasing compensation by raising benefits, whether they are health care, retirement or non-traditional perks. That is helping firms capable of paying the higher compensation costs to attract workers. However, these limited wage gains represent a problem for consumer-related businesses. With job growth limited by the lack of workers, total income increases are not expected to accelerate significantly and while demand has increased recently for these businesses, growth is likely to moderate over the next six months.”

Restaurant Staffing Difficulties Continue

With the national unemployment rate average at 3.9 percent over the last four months, it is no surprise that operators struggle to keep restaurants fully staffed. Things are even more difficult in certain parts of the country, with 20 states reporting unemployment of 3.6 percent or less in July.

In addition to retention issues, restaurants are dealing with their own expansion and what it means for their recruiting efforts. According to Black Box Intelligence (formerly TDn2K)’s Workforce Intelligence (formerly People Report) Workforce Index, 43 percent of brands expect to add management staff during the third quarter of 2018, while 49 percent plan to increase their hourly employee staff. Yet restaurants are finding that adding staff in this environment is not easy. According to this report, 59 percent of companies face increasing challenges for recruiting restaurant managers. A substantial 74 percent of brands said recruiting difficulty for hourly employees increased in the latest quarter.

Still, there is some good news. The latest Workforce Intelligence (formerly People Report) metrics indicate turnover rates for both managers and hourly employees dropped slightly in July. Considering the close relationship that exists between employee retention and guest sentiment particularly based on service (as measured by Guest Intelligence (formerly White Box Social Intelligence)) this is cause for cautious optimism going forward. Furthermore, research reveals that top performing brands in sales and traffic (as measured by Financial Intelligence (formerly Black Box Intelligence)) are already ahead of the curve in people practices that enable best in class retention and guest satisfaction.

Looking Ahead

Prior year events will have some unsettling effects on sales in the upcoming months. Hurricane Irma, which hit Florida and the southeast in early September 2017, will certainly impact comp sales for those areas, much the same as we reported from the Harvey effect. Other factors aside, we expect strong sales in the southeast in September. Given the magnitude of those economies, same-store sales should get a boost at a national level from the Irma effect.

At the same time, the recovery period in Texas following Harvey drove sales as many residents were unable to prepare meals at home. In addition, the influx of people pouring in to provide aid also drove demand. The result is tougher prior-year comps which may impact results in those regions.

Overall, given the current relative strength of the industry and September 2017’s soft results, there is room for some continued strong positive growth for the industry as we close the third quarter.



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 nearly $70 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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