Click this link for the weekly Restaurant Industry Performance Pulse updates
Restaurant Industry Snapshot™ October, 2018

Restaurant Sales Continue To Improve As Guests Visit Less But Spend More


As of June 1st, the Black Box Intelligence Restaurant Industry Snapshot™ will be a paid subscription and benefit of Workforce, Financial and Supplier Intelligence membership. Clients will receive an email to register their account later this month. If you are a current client of either of those products, please email for instructions on how to register your account for access to the Snapshot.

If you are not a client, you can purchase a subscription at this link.

Comp Sales & Traffic

Comp Sales

rolling 3 months

Comp Traffic

rolling 3 months

Restaurants continue to do better than they did a year ago, but this cannot be called a full recovery as guest counts are still falling. While restaurants had their fifth consecutive month of positive same-store sales growth during October, traffic growth was once again negative.

The underlying challenges operators faced in the last few years continue to plague the industry. There seems to be an oversaturation of restaurants and competition. Independent restaurant operators and players outside the restaurant industry (prepared goods in grocery stores, convenience stores) continue to steal dining occasions from chain restaurants.

Regional & Market Performance

Positive Markets 144 | 73% Negative Markets 52 | 27%

Strongest Region

  • Sales 2.23%
  • Traffic -0.84%

Weakest Region

  • Sales -1.65%
  • Traffic -4.21%

From an individual market perspective, widespread positive same-store sales growth was a bright spot for restaurants during October. Out of 196 individual DMAs tracked by Financial Intelligence (formerly Black Box Intelligence), 144 (or 73 percent) achieved positive sales growth during the month. For the last four months, between 73 and 76 percent of markets have reported positive sales growth.

From a regional perspective, most of the country also experienced positive growth during the month. Only three of the eleven regions of the country saw their sales drop during the month year over year.

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, September, 2018 Release

There is no doubt employee staffing is one of the most critical issues restaurants are currently wrestling with. What makes this challenge especially noteworthy is that Black Box Intelligence (formerly TDn2K) research has shown service is the attribute of the restaurant experience most commonly associated with top performing brands. And without a doubt, employee retention is a factor affecting service guest perception.

The challenges persisted during September, as both restaurant hourly employee and restaurant manager retention worsened once again.

Restaurant Sales Continue To Improve As Guests Visit Less But Spend More

Headlines continue to be encouraging for the industry, as chain restaurants posted their fifth consecutive month of positive same-store sales growth during October. This month’s sales growth rate of 0.8 percent does represent a slowdown from the 1.2 percent reported for September and the 1.8 percent for August, but there was a promising sign in October’s results. Same-store sales growth on a two-year basis was 1.1 percent during October. As a comparison, two-year sales growth rates averaged -0.9 percent for the previous six months. 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 $71 billion in annual sales.

“As the industry heads into the fourth quarter, the fear was that tougher sales comparisons from Q4 of last year would throw restaurant sales back into negative growth territory”, said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence (formerly TDn2K). “For reference, two out of the three months had positive sales growth during the fourth quarter of 2017. No other month of 2017 reported positive sales growth. But seeing restaurants grow their sales during October on top of positive sales growth during the comparable month a year ago suggests the industry’s sales momentum is robust and can carry into the new year.”

Less Guests But More Spending Fuels Sales Growth

Although positive sales growth is welcome news for restaurants, the way this growth was achieved during October tempers optimism in the strength of the industry by putting a spotlight on its problems. Same-store guest traffic was -2.2 percent in October, a 0.8 percentage point drop from the growth rate recorded for September. Furthermore, it was the weakest month for traffic growth since May.

An increase in average guest check year over year continues to fuel positive sales growth for restaurants. “Guest check growth accelerated in October,” said Fernandez. “At 3.0 percent, check growth during October was the highest we’ve seen in the last three years. Many brands have been raising their menu prices throughout the year, use of promotions to drive traffic may be slowing down and strong consumer confidence plus raising wages may be motivating consumers to spend a more when they dine out. Likely, we are seeing a combination of several or all of these factors.”

Consumer Spending Remains Robust, Sparking Hope For Strong Holiday Season

“The economy continues to expand strongly, but there are a few signs that the growth is moderating,” explained Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence (formerly TDn2K) economist. “The housing market is trending downward as mortgage rates and prices continue to climb. The trade battles have initially enlarged rather than shrunk the trade deficit. Business investment has been disappointing, given the surge in profits. But consumer spending remains robust and most importantly, wage gains are accelerating. That has offset the rise in prices.”

“While inflation-adjusted earnings are not soaring, they are growing fast enough to sustain solid household demand. Additionally, given the high level of consumer confidence, the holiday season should be very good,” continued Naroff. “That bodes well for restaurants. There is one significant concern, though: the savings rate is falling and, unless wage gains accelerate, the deterioration in spending power could cause households to cut back. The current draw down on savings is not sustainable. Expect demand to be good over the next six months, but by the spring, without better wage gains, consumers will probably become more restrained in their spending habits.”

Fast Casual and Casual Dining Continue to Find Success

Positive sales growth was widespread across most industry segments in October. All segments except for family dining achieved positive same-store sales growth.

The best performing segments based on sales growth were fast casual and casual dining. Both had growth rates above 1.0 percent in October. After having struggled through the last two years, these segments have emerged in 2018 as the most improved in terms of same-store sales performance. In fact they are the only segments with positive sales growth during each of the last five months.

Much discussion has centered around the viability of casual dining in this changing consumer landscape. However, the data shows some brands in the second largest segment within the industry have been able to turn the segment around this year.

Restaurant Staffing Pressures Intensify, Likely To Drive Rising Labor Costs

Over the last two years, restaurant operators have been citing staffing and employee retention among the biggest concerns they face. After a small relief from turnover rates that appeared to be stabilizing in recent months, turnover increased again during September for restaurant hourly employees and restaurant managers.

Additionally, restaurants need to keep up with replacing those employees that leave. Black Box Intelligence (formerly TDn2K)’s Workforce Intelligence (formerly People Report) data shows the number of jobs in chain restaurants grew by 1.7 percent during September, after a year-over-year growth of 2.1 percent during the previous month. According to Workforce Intelligence (formerly People Report)’s Q3 Workforce Index, 58 percent of restaurant companies plan to add hourly workers during the fourth quarter, while 51 percent said they plan to add management staff.

Not surprisingly given the environment, the latest Workforce Intelligence (formerly People Report) Workforce Index also revealed that about 70 percent of restaurant companies reported an increase in their staffing difficulties for both restaurant hourly employees and managers.

As the labor market experiences its lowest unemployment rates in almost fifty years, restaurants should be expecting rising labor costs ahead. With plenty of employment opportunities in the market, restaurant employees (particularly in management and back of the house) frequently mention pay among the main reasons they are quitting their jobs. Higher wages and salaries will have to be a part of many restaurants’ employment offerings if they are to remain competitive in the market.

You have Successfully Subscribed!