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Restaurant Industry Snapshot™ February, 2019

Chilly Sales & Traffic Growth, Understaffed Restaurants Plagued February


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Comp Sales & Traffic

Comp Sales

rolling 3 months

Comp Traffic

rolling 3 months

The eight-month run of positive same-store sales growth achieved by the restaurant industry ended in February with -0.6 percent. This has proven to be a challenging month for the industry over the last three years, with severe winter weather becoming a common occurrence affecting restaurant sales.

Guest counts also took a significant tumble during the month. February’s -3.7 percent same-store traffic growth was the worst result for the industry since September of 2017. The traffic decline was so severe that not even a 3.1 percent year-over-year increase in average guest check was able to sustain positive sales growth.

Regional & Market Performance

Positive Markets 87 | 44% Negative Markets 109 | 56%

Strongest Region

  • Sales 1.36%
  • Traffic -1.75%

Weakest Region

  • Sales -2.57%
  • Traffic -5.59%

The effect of winter weather on restaurant sales is again evident on the industry’s regional results. The best performing region was California with 1.4 percent same-store sales growth. Only California, the Southeast and Southwest were able to achieve positive sales growth during February.

The worst performing region was the Midwest with -2.6 percent same-store sales growth and a weak -5.6 percent growth in traffic. Undoubtedly the extreme weather that has plagued the region was a factor in the Midwest’s troubling results in February.

With only three regions posting positive sales growth during the month, it was not unexpected that sales were poor for most markets in the country. Out of 196 individual DMAs tracked by Financial Intelligence (formerly Black Box Intelligence) on a monthly basis, only 87 (or 44 percent) were able to achieve positive same-store sales growth in February. By contrast, about 73 percent of markets saw positive sales growth during the previous two months.

The Restaurant Workforce

job growth & turnover

Year/Year Job Growth*


Manager Turnover*

Q4 '
Roll 12

Hourly Turnover*

Q4 '
Roll 12
*Black Box Workforce Intelligence, December, -1 Release

Keeping restaurants fully staffed remains one of the biggest concerns for restaurant operators. While they constantly state that finding enough qualified employees is a problem, poor employee retention may be the toughest challenge. Restaurant turnover rates are at historically high levels and increased again in January according to Black Box Intelligence (formerly TDn2K)’s Workforce Intelligence (formerly People Report).

While retaining current employees continues to be a headache for restaurants, the fact that the industry has been creating jobs at a rate of over 2.0 percent year over year since December only exacerbates the dire staffing environment.

Chilly Sales & Traffic Growth, Understaffed Restaurants Plagued February

Optimism for the restaurant industry came to a sudden stop in February, as winter weather halted sales and traffic. Same-store sales growth was -0.6 percent during the month. Restaurants have not experienced negative year-over-year sales growth since May. It was the worst month for the industry since February of 2018, which may be signaling a new troubling trend for chain restaurants. This comes 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.

“February was the month with the worst same-store sales growth rates for both 2017 and 2018, and it was a disappointing month again this year,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence (formerly TDn2K). “Sales growth has been negative for the month since 2017, and the cumulative effect was a concerning 5.2 percent drop in sales for February over the last three years. Bad weather seems to be the catalyst that amplifies the effects of the challenges faced by chain restaurants. There are too many restaurant locations and too many players competing in the food-away-from-home category. Any disruption in the usual routine of consumers seems to be enough to cause a downturn.”

Traffic Plummeted In February

Same-store traffic growth was -3.7 percent during the month, which represented a drop of 3.0 percentage points compared with January’s results. “Chain restaurants clearly have a same-store traffic problem. Growth rates for this important metric have been negative each year since the recession. But with traffic results improving each month since October, the industry was trending in the right direction. That obviously ended in February,” stated Fernandez. “The last time the industry experienced worse traffic growth results occurred when some of the biggest states in the country where suffering through enormous back-to-back hurricanes in August and September of 2017.

Regional Results Highlight the Weather Effect

Only three regions saw positive same-store sales growth during February: California, the Southeast and Southwest. The region with the worst sales growth results, the Midwest, seems to have been hit the hardest this winter.

Closer inspection adds some additional context into February. Same-store sales growth was slightly positive on average during the first three weeks of the month. It was an abysmal fourth week that dragged the month into negative sales growth. The worst performing regions based on same-store sales growth during that final week were the Mid-Atlantic, New York-New Jersey, the Midwest and New England.

Strong Valentine’s Day Boosts Fine Dining to Best Performing Segment

Fine dining was the best performing industry segment during February for same-store sales growth. This segment has been consistently achieving strong sales over the last three years. But in the case of February of 2019, the segment’s performance was boosted by strong sales during the week of Valentine’s Day. The latest data shows that consumers who can afford it are increasingly spending more on fine dining experiences to celebrate the holiday. Same-store sales growth for Valentine’s Day week is in double digits compared with February of 2017. By comparison, sales growth for the restaurant industry overall is essentially flat over a two-year period for that same week.

Economic Growth Slows, Growing Family Incomes Support Optimism

“The 2.6% increase in GDP during the fourth quarter marked the second consecutive easing in growth”, explained Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence (formerly TDn2K) economist. “However, that rate was still above trend, indicating that the expansion is moderating, not faltering.”

The government shutdown likely slowed the expansion further in the current quarter, but most of the loss should be made up by the summer. Thus, a weak first quarter growth number followed by a more solid second quarter is expected.

There are no major reasons to think the economy will either accelerate or decelerate sharply. The expectation is for growth to be similar to what we saw in the first half of the decade. However, unlike that period, consumer income and spending should rise at a solid pace. With labor markets tight, even with more moderate growth in the economy, wages will remain under pressure with labor shortages and faster income gains spreading across the entire economy. The good news is that the growing family incomes would support continued moderate spending gains, not the tepid ones we saw from 2012 to 2016.

Understaffed Locations Continue To Hurt Restaurants

Staffing woes continued for restaurants according to Black Box Intelligence (formerly TDn2K)’s Workforce Intelligence (formerly People Report). The latest metrics show annual turnover rates increased again for hourly employees and all levels of restaurant management during January. With restaurant turnover at historically high levels and rising, it is not surprising that the average restaurant company said 34 percent of their locations are not fully staffed at any given time based on responses to Workforce Intelligence (formerly People Report)’s 2019 Recruiting and Turnover Survey. A driver of superior sales and traffic performance is delivering on exceptional service, which is close to impossible for restaurants to deliver when frequently understaffed.

Staffing challenges are compounded by the fact that the industry continues to expand its number of locations and add jobs. Chain restaurant year-over-year employment growth was 2.1 percent during January. The industry has been adding jobs at a pace greater than 2.0 percent for the last three months, adding to the staffing needs in an already extremely tight labor market. An acceleration of wages and salaries is an expected consequence of these pressures, further impacting the rising labor costs experienced by the industry in recent years.


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) and Guest Intelligence (formerly White Box Social 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 databases of real restaurant data in the US that includes over 305 companies, 2.6 million employees and nearly $72 billion in annual revenue. Black Box Intelligence (formerly TDn2K) also produces the Global Best Practices Conference held annually each January in Dallas, Texas.