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Restaurant Industry Snapshot™ September, 2019

Traffic Continues to Decline, Check Averages at Historic Highs with Stagnant Sales


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Comp Sales & Traffic

Comp Sales

rolling 3 months

Comp Traffic

rolling 3 months

Restaurant industry sales slipped into actual year-over-year contraction during September. Even with slight positive same-store sales growth during the month, at 0.09 percent, growth for the quarter was negative at -0.4 percent.

Sluggish sales will likely continue through the fourth quarter, particularly due to the weakening economic conditions as well as the fact that the industry is lapping over strong same-store sales growth in the fourth quarter of 2018.

Declining traffic continues to be a source of headaches for operators, even with a slight recovery during September. Traffic growth was -3.0 percent during the month, representing a 0.8 percentage point improvement over the average of the previous two months.

Regional & Market Performance

Positive Markets 107 | 54% Negative Markets 91 | 46%

Strongest Region

  • Sales 1.51%
  • Traffic -0.93%

Weakest Region

  • Sales -3.12%
  • Traffic -5.18%

Regional and local performance improved during September. Five of 11 regions experienced positive sales growth during September. The Southeast achieved the highest same-store sales growth, at 1.51 percent. Florida experienced sales growth at 3.12 percent, and a -5.18 percent decline in traffic growth.

54 percent of local markets experienced positive market sales, compared to 43 percent during the previous month.

The Restaurant Workforce

job growth & turnover

Year/Year Job Growth*


Manager Turnover*

Q3 '19
Roll 12

Hourly Turnover*

Q3 '19
Roll 12
*Black Box Workforce Intelligence, August, 2019 Release

Turnover remains at historically high levels. Hourly, non-management turnover increased again during August. Understaffing remains a huge concern and is expected to continue. A stable and engaged workforce is key for brands to deliver on service to guests. Data indicates that brands who are able to retain employees and achieve positive traffic fare better in terms of online guest sentiment.

Companies who are able to stay on top of the staffing and traffic crisis are investing in employee training and career development, especially for managers. This allows them to deliver a superior experience to their guests and keep them coming back.

Traffic Continues to Decline, Check Averages at Historic Highs with Stagnant Sales

The restaurant industry’s sales completed the gradual slowdown we’ve been witnessing since the beginning of the year and slipped into actual year-over-year contraction. For the first time in two years, growth was negative during the third quarter of 2019 with same-store sales growth of -0.4 percent (the first quarter of 2018 at -0.05 percent sales growth can be considered essentially flat). This update comes from Financial Intelligence (formerly Black Box Intelligence) data from Black Box Intelligence (formerly TDn2K), based on weekly sales from over 31,000 locations representing 170+ brands and $72 billion in annual sales.

There was a bit of good news amid the otherwise disappointing quarter. The trend of two consecutive months with declining year-over-year sales reversed, with small positive same-store sales growth in September. Even more encouraging for the industry was the fact that September’s positive growth, albeit small at 0.1 percent, was achieved even though the industry was lapping over a month with relatively strong sales last year.

“This is something we were expecting given the underlying relentless erosion of guest counts and the fact that the industry was headed towards tougher previous year sales comparisons as we went into the second half of 2019,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence (formerly TDn2K).

However, if we stand back and look at the industry from a longer-term perspective, things have not changed much. Same-store sales growth calculated over two years has remained positive the last four quarters. At 0.7 percent for the third quarter of 2019, it doesn’t show much of a decline from the average 0.8 percent recorded for the first three quarters of the year.”

Traffic Plummeted During Q3, Causing the Sales Stumble

Despite average guest checks growing at the same pace year over year for the last three quarters, same-store sales growth has been declining during each of those quarters. This is attributed to worsening same-store traffic growth. Same-store traffic growth in the third quarter was -3.5 percent, the worst result in the last two years and the only time guest counts declined by more than 3.0 percent during the same period.

Same-store traffic growth during September was -3.0 percent, which despite being a weak result, did represent a 0.8 percentage point improvement over the average results posted by the previous two months, providing further argument for September actually being a small recovery for a beleaguered restaurant industry.

Restaurant Sales Worsened By Hurricane Effect, Particularly In Florida

As predicted, restaurant sales suffered the effect of the massive storms hitting the southeastern part of the country during September. The hardest hit region was Florida, which experienced -3.1 percent same-store sales growth during September. Sales growth declined by 1.6 percent in that region compared with August, while every other region of the country experienced an improvement during September.

September’s same-store traffic growth in Florida was an abysmal -5.2 percent, which also represented a 1.6 percentage point drop from the previous month’s results.

Other regions affected by evacuations may have benefitted from the effect of severe weather, as people were displaced and forced to purchase more meals away from home within the same region but at more inland locations. The Southeast was the best performing region based on same-store sales growth during September as well as one of the top regions based on year over year sales growth improvement compared with August.

Fine Dining Still Winning the Sales Growth Game

Fine dining continues its dominance as the best performing segment in the industry based on same-store sales growth. This segment had the highest growth during the third quarter and also is the top performer year to date. Furthermore, if the trend holds through the end of the year it would be the third consecutive year of positive growth for dine dining.

The only other industry segment that was able to achieve positive same-store sales growth during the third quarter was family dining. This segment has been experiencing a resurgence lately, posting five consecutive quarters of positive growth, currently the longest streak of positive same-store sales growth by any restaurant segment.

However, it is important to note that the traffic loss problem is widespread throughout the industry. Note even these top-performing segments can escape from eroding guest counts. All segments experienced negative same-store sales growth during the third quarter of 2019.

Concerns for Restaurant Spending: Economic Uncertainty and Slow Income Growth

According to Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence (formerly TDn2K) economist, the outlook for the economy remains uncertain and dependent upon tariff actions. “The negative effects of the trade war are spreading across the economy, largely driven by business uncertainty. Manufacturing has already moved into a downturn. Job growth has slowed, due to businesses willing to leave job openings unfilled as well as the lowest unemployment rate in nearly fifty years limiting the supply of qualified workers. The result is that household incomes are growing more slowly, making it difficult for consumption to expand strongly. It looks like growth in the third quarter, which was just completed, will be in the 2.0 percent range.”

“Unless there is a breakthrough in the trade negotiations so that the threatened additional tariffs do not come into play, 2.0 percent growth might be the best we could see for quite a while. That is a warning that discretionary consumer spending, of which restaurants are a component, is likely to continue being soft going forward.”

Small Relief For Management Retention, But Staffing Still Concerning

Arguably, the two biggest headwinds faced by restaurants today are declining traffic and keeping restaurants staffed with enough qualified employees. Black Box Intelligence (formerly TDn2K) research shows there may be a lot of connection between the two. A recent study of restaurant brands achieving consistent positive traffic growth revealed these companies get much better guest sentiment scores based on their service according to Guest Intelligence (formerly White Box Social Intelligence). They are also better at retaining their employees, particularly at the management level. Data indicates that those brands that get rewarded by incremental guest visits are perceived differently by their guests when it comes to service, and having a stable and engaged workforce is a great starting point.

Unfortunately for most restaurants, that is not the case. Turnover for hourly, non-management employees increased again during August and remains at historically high levels according to Workforce Intelligence (formerly People Report). A large percentage of restaurants remain understaffed, especially in back-of-house positions, which have emerged as the largest pain point regarding staffing in restaurants.

There is a little bit of good news from the latest workforce results: restaurant management turnover decreased slightly during the latest month, an indication that increases may have plateaued. However, turnover for managers also remains at historically high levels and continues to be a concern, particularly because of the influence of management on hourly retention and engagement.

Looking Ahead

Same-store sales growth is expected to continue to be sluggish during the fourth quarter given the softening economic conditions and the fact that the fourth quarter of 2018 was the strongest in terms of same-store sales with 1.4 percent growth. Slightly negative sales, as seen during the third quarter, are likely to occur again in the last quarter of 2019.

Staffing woes are expected to continue. Historically high turnover for both hourly and management employees continues to be the norm and a large percentage of restaurants will continue to be understaffed as a result.

Data has shown that those companies investing in employee training, career development (particularly for their managers) and crafting a strong sense of purpose throughout their workforce will be those positioned to fare better in retaining and engaging their workforce. They will also provide a superior service experience to their guests, which ultimately is what wins the restaurant market share battle.


Black Box Intelligence (formerly TDn2K) is the leading insights & knowledge provider of restaurant industry human resources, financial performance and consumer insights data through their products Workforce Intelligence (formerly People Report), Financial Intelligence (formerly Black Box Intelligence), Guest Intelligence (formerly White Box Social Intelligence) & Consumer Intelligence. Black Box Intelligence (formerly TDn2K) allows organizations to leverage benchmarked data to achieve best-in-class performance results. Black Box Intelligence (formerly TDn2K) currently tracks, analyzes and benchmarks the largest database of real restaurant data in the US that includes over 300 companies, over 2.8 million employees and $72 billion in annual revenue. Black Box Intelligence (formerly TDn2K) also produces the Global Best Practices Conference held annually each January in Dallas, Texas.