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Restaurant Industry Snapshot™ October, 2019

October Restaurant Sales Performance Prove it’s too Early to Declare a Recession


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Comp Sales & Traffic

Comp Sales

rolling 3 months

Comp Traffic

rolling 3 months

It’s too soon to declare a recession, as indicated by October’s restaurant industry sales performance. Even though the industry is experiencing a slowdown, it was still able to post a second consecutive month of positive same-store sales growth.

It is possible for the industry to remain in small positive sales growth territory for the rest of 2019, but the possibility of dipping into negative sales growth still looms for operators.

The erosion of guest counts remains unchanged, as restaurants rely on to-go and off-premise sales to fuel growth. Third-party delivery is playing a large part in this shift toward off-premise consumption. 86 percent of operators not currently using a third-party delivery platform are planning to implement it within the next twelve months.

Regional & Market Performance

Positive Markets 104 | 53% Negative Markets 94 | 47%

Strongest Region

  • Sales 1.36%
  • Traffic -1.43%

Weakest Region

  • Sales -0.94%
  • Traffic -4.04%

Regional and market performance have not changed drastically since September. Six of 11 regions experienced positive sales growth in October. The Western region achieved the highest same-store sales growth at 1.4 percent. Texas was the weakest region, experiencing a -0.94 percent decline and sales growth and a -4.04 percent decline in traffic.

53 percent of local markets experienced positive market sales, compared to 54 percent during September.

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, September, 2019 Release

The restaurant industry is experiencing increased manager turnover yet again. Black Box Intelligence (formerly TDn2K) studies reveal the tight labor market paired with stagnant pay are contributing toward these alarming turnover numbers. The gap in median base salary increase for general managers favors limited service brands, even though these salaries have only increased by 1.2 percent over the last four years (once adjusted for inflation).

As the possibility of a recession becomes more real, brands most prepared for the downturn are those that are able to provide a compelling value proposition to employees.

October Restaurant Sales Performance Prove it’s too Early to Declare a Recession

It is undeniable that the restaurant industry is experiencing a significant slowdown in same-store sales growth since the second quarter of the year, however in October, the industry was able to post its second consecutive month of small positive same-store sales growth at 0.1 percent. In addition, reversing the trend of negative year-over-year sales growth reported for July and August is welcomed news for the industry and consumer spending.

This report comes from Financial Intelligence (formerly Black Box Intelligence) data from Black Box Intelligence (formerly TDn2K), based on weekly sales from over 31,000 and $72 billion in annual sales.

“What is even more encouraging for the industry,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence (formerly TDn2K), “is that this small positive growth during the last two months has been achieved despite the industry lapping over two months with relatively strong performance in 2018. The industry’s two-year same-store sales growth continues to be positive and stable. The industry grew its same-store sales by 1.0 percent compared with October of 2017, while the average two-year growth for the previous six months is also 1.0 percent. Given the relentless erosion of guest counts, the industry is holding its ground surprisingly well when it comes to sales in the most recent months. The reason has been the acceleration in guest checks year over year. Consumers have signaled they are willing and able to spend increasingly more every time they eat out.”

Traffic Growth Remains Top Concern

Same-store traffic growth was -3.1 percent during October, which represented a 0.2 percentage point drop from September’s result. October’s weak traffic has become the norm in the industry. Same-store traffic growth has averaged -3.2 percent for the seven months since the beginning of the second quarter.

Although the net growth in the number of chain restaurant locations has slowed in recent years, growth continues to be positive and is compounded year over year. The result is a highly saturated industry in which restaurant visits continue to get diluted among many possible options for diners. In this environment, same-store traffic growth continues to be a real challenge for operators.

Off-Premise Sales Continue Fueling Growth, Third Party Delivery An Important Factor

Even if overall sales in comparable stores achieved some positive growth during October, it was entirely due to off-premise sales growth. This has been one of the most persistent and important shifts that we are tracking. The norm for the industry is now declining dine-in sales growth offset by very strong to-go and other forms of off-premise sales.

Third party delivery is undoubtedly playing a part in this shift, driven by the rapid adoption rates by the industry of this new sales channel. According to a recently published survey by Financial Intelligence (formerly Black Box Intelligence)*, 86 percent of restaurant companies currently use some form of third party delivery, up from 82 percent at the end of 2018. And perhaps more telling, 86 percent of those restaurant companies that currently don’t use it are planning to implement third party delivery within the next twelve months.

*For access to the 2019 Third Party Delivery Survey Results, please contact

Family and Upscale Dining are Best Performing Segments, Casual Dining Hurting

The fine dining and family dining segments continued to achieve positive same-store sales growth during October. Upscale casual rounded up the list of best performing segments based on same-store sales growth during October. The latter had been struggling through declining sales growth for most of the year, but experienced a strong rebound helped in part by a weaker comparison in October of 2018.

After a strong 2018, casual dining is experiencing a downturn this year. This segment was the worst-performing based on sales growth during October. Casual dining has now endured four consecutive months of negative same-store sales growth.

Pay Increases Necessary for Restaurant Managers

Restaurants continue adding jobs at an unyielding pace. The latest numbers from the Bureau of Labor Statistics show the number of employees in the industry growing by 2.6 percent in October. This rapid growth continues to ratchet up the pressure for those tasked with keeping restaurants staffed, especially considering the historically high turnover rates that the industry has been experiencing.

There was some relief for restaurants in the form of rolling 12-month turnover for hourly, non-management employees declining slightly during September. This small reduction notwithstanding, turnover for hourly crew remains at unsustainable levels for most restaurant companies. Furthermore, turnover is not expected to decrease significantly in the near term as long as unemployment continues to be this low.

After a slowdown in its upward trend in August, restaurant manager turnover increased again during September. Management turnover is crucial given its relationship to hourly employee engagement and retention, as well as its direct effect on the overall restaurant sales and traffic performance as revealed through ongoing Black Box Intelligence (formerly TDn2K) studies. Some of the reasons management turnover has been skyrocketing in recent years has been the tight labor market coupled with stagnant pay.

Workforce Intelligence (formerly People Report) data shows the median base salary for general managers in limited service restaurant brands has increased by only 1.2 percent over the last four years once adjusted for inflation. As small as this increase is in real pay, it is much better than the -3.5 percent general managers in full service brands have experienced during the period. Their employers are likely asking them to do more than they did four years ago in an increasingly complex environment, yet their pay is not reflecting that.

Looking Ahead

When it comes to sales, the industry’s run to the finish line at the end of 2019 will be much more of a crawl than a sprint. Macroeconomic conditions are not very encouraging for anything but maintaining present consumer spending trends. Restaurant traffic continues to slowly vanish. Sales were relatively strong for the last two months of 2018 which means tougher hurdles when calculating sales growth in November and December this year.

The best-case scenario for the industry remains small positive same-store sales growth for the rest of the year, but dipping into negative territory again continues to be a distinct possibility.

What definitely will not change is restaurants struggling to find employees and keep them engaged. “As the word ‘recession’ starts appearing more often in the media and restaurant operators wonder what lies ahead with the economy we know those that are better prepared for a downturn are those brands that have been succeeding on the people side of the equation,” said Fernandez. “Those that have provided a compelling employee value proposition and are effectively delivering on it are likely to remain the winners in the current environment and fare better should economic conditions deteriorate.”

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.


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