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Restaurant Industry Snapshot™ February, 2020

February Sales Show No Impact of Coronavirus; Yet


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Comp Sales & Traffic

Comp Sales

rolling 3 months

Comp Traffic

rolling 3 months

Restaurant same-stores sales remained positive during February, for the second month in a row, albeit modest. It is likely still due to the effects of favorable weather conditions in regions that typically deal with harsher winters. Full service brands performed the best in February, with some incremental sales.

Strong to-go sales are widespread across the industry; however, the top performing brands are excelling at both dine-in and off-premise at a faster pace than the rest. The economic outlook for the spring and summer is flat, or even possibly negative, due to rising fears about Coronavirus as well as political uncertainty.

Regional & Market Performance

Positive Markets 103 | 52% Negative Markets 95 | 48%

Strongest Region

  • Sales 3.79%
  • Traffic 0.88%

Weakest Region

  • Sales -2.82%
  • Traffic -4.57%

Texas continued to be the weakest performing region, dropping from -0.53% sales in January to -2.82% in February. The Western region was the strongest, with 3.79% sales and 0.88% traffic growth. Only 4 regions experienced negative same-store sales during the month.

Market sales were split from a local perspective. 52% of local markets experienced positive sales, and 48% experienced negative sales. Similar to January, regions that are commonly impacted by severe winter weather benefited from warmer conditions and experienced strong sales growth.

The Restaurant Workforce

job growth & turnover

Year/Year Job Growth*


Manager Turnover*

Q1 '20
Roll 12

Hourly Turnover*

Q1 '20
Roll 12
*Black Box Workforce Intelligence, January, 2020 Release

Staffing vacancies continue to be a source of headaches for operators as a result of record turnover rates. Rolling-12 turnover increased in January for both non-management and restaurant positions.

March could prove to be tough for employees, especially if traffic experiences a bigger hit due to fears of the Coronavirus.

February Sales Show No Impact of Coronavirus; Yet

Restaurants were able to post their second consecutive month of positive same-store sales growth during February; though growth may not be described as anything more than modest. Sales growth was 0.3% during the month, coming on the heels of the 2.2% headline-grabbing growth we saw last month as a consequence of the unusually warm winter. Favorable weather is likely playing a part in February’s small positive growth, but this factor’s effect seems to have somewhat moderated. This update comes from Black Box Intelligence™ (formerly TDn2K™) data based on its Financial Intelligence from over 47,000 restaurants and $75 billion in annual sales.

Restaurants have now achieved positive sales growth during 5 of the last 6 months. “As encouraging as that sounds, restaurant sales are far from strong, which is not surprising for an industry that continues to struggle with declining guest counts,” cautioned Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence. “The average same-store sales growth for the last 6 months is 0.4% but, if January’s artificially high results are excluded, the average for the period is flat sales growth year over year. Furthermore, same-store sales dropped by 0.2 percentage points during February compared with the same month 2 years ago. This was only the second time in the last 12 months that 2-year stacked growth was negative.

Guest Counts Remain a Weakness; But not for All Restaurants

Same-store traffic growth was -2.0% in February. On the surface this seems a relatively strong result for an industry that has struggled heavily with declining guest counts. By comparison, traffic growth for all of 2019 was -3.1%. However, February’s traffic result was achieved by lapping over a weak February last year that experienced traffic growth of -3.7%.

While the norm is for restaurant brands to be facing declining guest counts year over year, Black Box Intelligence research has revealed that brands that have consistently been able to grow their guest counts over the last 2 years received better service scores in guest ratings and excel in providing a superior overall dining experience, which includes higher ambiance guest sentiment. Although strong positive to-go same-store sales growth is relatively widespread in the industry right now, those brands growing their traffic are outperforming not only in the dine-in category but also growing their to-go sales at a much faster pace.

Positive Effect of Favorable Weather Decreasing

7 of the 11 regions of the country were able to achieve positive same-store sales during February. As was the case last month, the regions where restaurant sales are typically most negatively impacted by severe winter weather are among those with strong sales growth during February. The Midwest, New York-New Jersey, New England, Mid-Atlantic and Mountain Plains all posted same-store sales better than 1.5% during the month.

The winter has been very mild this year and undoubtedly that continues to be a tailwind for restaurant sales. However, while those aforementioned regions experienced sales growth around 4.0% in January, growth rates for each of these regions declined the following month.

Full Service Restaurants Outperforming on Sales Growth

Similar to what occurred in January, it seems warmer weather in February has created some incremental sales, particularly for those brands founded on dine-in, experience-based occasions. The top performing industry segments based on same-store sales growth during the month were fine dining, casual dining and upscale casual, ranked in order of highest to lowest sales growth rates.

Economic Slowdown Fears Fueled by Coronavirus

“When it comes to the economy, it is all about the coronavirus, so the past may not be prologue,” commented Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence economist. “That is especially true since growth remained decent through February. The data have yet to show any ill effects of the virus, despite the quarantines in China and the signs of it spreading to other parts of the world. That is not a surprise, as the numbers were not expected to reflect the impact until spring and summer. Given that a vaccine could be a year out, it has to be assumed the coronavirus will spread across the United States. The key issue will be the fear factor it triggers. Not only will people shy away from any activity where there are groups, but frightened populations demand drastic action. That would exacerbate the slowdown.”

“Currently, it looks like the spring and summer quarters will be largely flat or even negative. Recession estimates are in the 60% probability range. The restaurant industry would be hit not only by the economic slowdown but also the fear of congregating with others. The only good news is that once the virus is contained, people should go back to living normal lives quickly and the recovery could be rapid and strong.”

Unfilled Restaurant Positions Increase, Amid Rising Turnover Rates

Besides the declining guest counts, the other challenge that has remained unrelenting for restaurants in recent years has been growing staffing difficulties. There is no denying this is an industry based on people. This need for employees continues to increase relative to the rest of the economy. According to the Bureau of Labor Statistics, employment in foodservice and drinking places has grown by an average 2.4% year over year for each of the last 5 years. The growth in overall employment in the economy during the same period has been only 1.7% per year.

That is the net growth in employees in the industry, but of course staffing difficulties include the replacement of all those employees that are quitting their current restaurant jobs. Turnover rates continue at historically high levels for the industry. Additionally, both restaurant non-management and management rolling 12-month turnover rates increased again in January based on Black Box Intelligence’s latest published results.

As a result of the skyrocketing turnover rates, the number of unfilled positions in restaurants continues to be a problem. Black Box Intelligence’s Workforce Index reported that in Q4 2019, 38% of restaurant companies reported an increase in the number of their unfilled restaurant hourly employee positions. 30% of restaurant companies experienced an increase in unfilled management positions during the quarter.

Looking Ahead

Economists are beginning to revise their economic growth estimates downward for the year, as a major unforeseen obstacle in the form of the coronavirus scare threatens to hinder the global economy. Earlier estimates were already pointing towards a slowdown in economic growth compared with the previous year. The uncertainty of an election year does not help either.

The first quarter of 2020 is expected to show positive same-store sales growth for restaurants, unquestionably aided by the extremely favorable weather conditions this year and their significant effect on January’s sales particularly.

Nonetheless, March could prove to be challenging. On one hand, sales growth was strong during that month last year (same-store sales growth in March 2019 was 1.2%), which provides for a tougher comparison when calculating sales growth. For reference, February’s sales growth rate in 2019 was -0.6% and yet the industry was only able to post a small positive increase last month. On the other hand, as news of more cases of coronavirus become more prevalent and continue to be shared, some negative effect on restaurant sales becomes unavoidable. We are already hearing from major corporate gatherings being cancelled due to illness-related fears. Those markets typically labeled as travel destinations, be it for spring break vacations or for corporate events, will probably be hit first as traveling winds down as a precaution. Just how big an impact this will have, it is too early to tell.


Black Box Intelligence™ (formerly TDn2K™) is the leading data and insights provider of workforce, guest, consumer and financial performance benchmarks for the hospitality industry. The Black Box Intelligence product suite is the industry standard for operators seeking to achieve best-in-class performance results. With the largest and most reliable set of real restaurant data in the marketplace, Black Box Intelligence currently tracks and analyzes more than 300 companies, over 2.8 million employees, 47,000 restaurant units and $75 billion in annual sales revenue. Black Box Intelligence is also the producer of the Global Best Practices Conference held annually in Dallas, Texas.


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