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Restaurant Industry Snapshot™ January, 2019

Focus Shifts to Staffing as Restaurant Sales Hold Strong in January


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Comp Sales & Traffic

Comp Sales

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Comp Traffic

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Restaurants had another strong month of same-store sales during January. For the second consecutive month, same-store sales growth remained at 2.0 percent. These have been the best two months based on sales growth for the industry in over two years.

Although the story has not changed much in terms of restaurant traffic, which continue to post negative same-store growth year over year since the recession, there have been some signs of relative improvement in the last two months. Same-store traffic growth was -0.7 percent in January.

Regional & Market Performance

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

Strongest Region

  • Sales 7.21%
  • Traffic 4.35%

Weakest Region

  • Sales -0.48%
  • Traffic -2.66%

Bad weather negatively impacted restaurant sales during January. Though most regions of the country experienced positive same-store sales growth during the month, the four regions that had flat or declining sales year over year were among the most impacted by severe winter storms. The worst performing region based on same-store sales growth during January was the Midwest (-0.5 percent sales growth).

From an individual market perspective, January was also a strong month for restaurants. Of the 196 DMAs tracked by Financial Intelligence (formerly Black Box Intelligence), 73 percent achieved positive sales growth during the month. This is about the same percentage of markets that have achieved positive sales growth during the last seven months. But even though national sales growth was the same in December, January saw a decline in markets with positive sales growth. The percentage of positive DMAs was 84 percent for the previous month.

The Restaurant Workforce

job growth & turnover

Year/Year Job Growth*


Manager Turnover*

Q4 '18
Roll 12

Hourly Turnover*

Q4 '18
Roll 12
*Black Box Workforce Intelligence, December, 2018 Release

For years an ongoing concern for restaurant operators has been finding enough qualified employees and keeping them once onboarded. Restaurants continue to increase their number of employees at a fast pace. According to Black Box Intelligence (formerly TDn2K)’s Workforce Intelligence (formerly People Report), restaurant job growth year over year was 2.4 percent during December, a small uptick from November’s job growth of 2.2 percent. This growing employee need is problematic.

In addition to these new jobs needing to be filled, restaurant operators continue to struggle with keeping their existing restaurants fully staffed. Turnover for hourly employees and restaurant managers rose again in December. Of particular concern is the declining management retention. Management turnover has reached historically high levels which undoubtedly lead to higher hourly turnover, poor employee engagement within the restaurants and unfulfilled service standards for many restaurant brands.

Focus Shifts to Staffing as Restaurant Sales Hold Strong in January

Encouraging news keeps coming for restaurant operators. Same-store sales growth was 2.0 percent during January as the industry posted its eighth consecutive month of positive growth. January matched December’s growth; the best two months for the industry in more than three years based on same-store sales growth. These insights come from Black Box Intelligence (formerly TDn2K)’s Financial Intelligence (formerly Black Box Intelligence) data, based on weekly sales from over 31,000 locations representing 170+ brands and nearly $72 billion in annual sales.

“Winter months are tricky to report on due to the noise in the data coming from weather and the potential effect of holiday shifts,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence (formerly TDn2K). “However, it is hard not to remain optimistic about the relative strength of restaurant performance, especially when looking at sales growth over a longer time period. January’s same-store sales growth compared with January 2017 was 1.3 percent. Industry two-year sales growth has now been positive for the past four months, after more than two years of declining growth.”

New Store Openings Continue To Hurt Same-Store Traffic

The bleak headlines continue when it comes to same-store guest counts in chain restaurants. January’s same-store traffic growth was -0.7. Despite remaining negative, traffic growth shows some signs of improvement. The average same-store traffic growth over the last two months was -0.8 percent. By comparison, the average for the previous six months was -1.5 percent.

A recent study by Black Box Intelligence (formerly TDn2K) released to its members at the Global Best Practices Conference in January, analyzed the Financial Intelligence (formerly Black Box Intelligence) traffic for existing chain restaurant locations from 2013 to 2018. The study revealed that the average restaurant location lost almost one of every ten restaurant visits in the last five years.

The picture is quite different when factoring in the traffic of these newly opened restaurants. Total traffic growth for chain restaurants was actually positive in the last five years. In other words, consumers are not moving away from chain restaurants; in fact the opposite is true. The stark reality is that the net growth in new restaurants opened during the period outpaced population growth. Restaurant visits are diluted over a larger base, which translates into same-store traffic falling on average. Additional studies by Black Box Intelligence (formerly TDn2K) revealed that despite the industry’s same-store traffic woes, best in class performing restaurant brands are driving positive traffic consistently.

Consumer Spending Expected To Continue Expanding at Moderate Pace

“In the span of just two months, we went from stock market meltdowns to government shutdowns,” commented Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence (formerly TDn2K) economist. “Yet despite all the chaos, the economy keeps moving forward. Job growth remains solid and while consumer confidence was hit hard by the Washington political games, the decline is not expected to slow household spending significantly. Ultimately, people determine their consumption levels based on their incomes. Given that the rise in wages should accelerate as the labor markets tighten further, spending on discretionary items, including restaurants, should hold up quite well.”

“The only major issue overhanging the economy is the potential for a full-fledged trade war. More than likely an agreement that is more puff than pastry will be the outcome. Once that hurdle is cleared, the economy and consumer spending should expand at a moderate pace the remainder of the year.”

Sales Were Strong Throughout Entire Industry In January

Sales performance was strong across the entire industry for the last two months. All industry segments posted positive same-store sales growth in December and January, the only time this has occurred in the last three years.

The best performing segment based on same-store sales during January was fine dining, undoubtedly assisted by a shift in the New Year’s Eve holiday, which fell into the first week of the year in 2019. Conversely, this segment was among the worst performers in December, as the effect of this holiday shift worked against them. Other top performing segments during January were quick service and family dining.

Weather A Factor In January

Severe winter storms were a factor in four out of the five regions of the country with the lowest same-store sales during January, ranging in sales growth from 0.1 to -0.5 percent. New England, New York-New Jersey, the Midwest and Mid-Atlantic all reported same-store sales growth worse than -5.0 percent during the third week of the month, as winter storms kept some consumers from dining out.

Staffing Challenges Continue for Restaurants

According to Black Box Intelligence (formerly TDn2K) analysis based on data from Guest Intelligence (formerly White Box Social Intelligence), service is the key attribute of the restaurant experience where top performing brands in the marketplace continue to excel. However, the staffing crisis being experienced in the restaurant industry is making it close to impossible for brands other than those at the highest level of performance to deliver on the service levels they aim to provide.

There are many factors contributing to these increased staffing headaches. The industry continues to expand, placing a lot of pressure on those people responsible for keeping restaurants fully staffed. Year-over-year growth in restaurant jobs was 2.4 percent in December according to Black Box Intelligence (formerly TDn2K)’s Workforce Intelligence (formerly People Report). The sentiment in the industry also points towards rising staffing difficulties. According to the Q4 Workforce Intelligence (formerly People Report) Workforce Index, 59 percent of participating brands reported that recruiting managers during that quarter was more difficult than during the third quarter. 68 percent of brands reported increased recruiting difficulty for restaurant hourly employees.

Poor employee retention continues to be the other roadblock for restaurant service. Workforce Intelligence (formerly People Report) analysis shows turnover for both hourly employees and restaurant managers increased again in December. Turnover rates remain at historically high levels, which translates to large portions of the industry’s employee base being short-tenured, not fully trained and unengaged in their jobs. For chain restaurants trying to win the share of stomach battle, this situation is not ideal. Poor retention makes it more challenging for operators to provide guests a superior experience that keeps them coming back.


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, nearly 2.6 million employees and $72 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.

Restaurant Operators


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