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Restaurant Industry Snapshot™ March, 2019

Improved Consumer Confidence Fuels Restaurant Sales Momentum


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Comp Sales & Traffic

Comp Sales

rolling 3 months

Comp Traffic

rolling 3 months

Restaurants returned to positive sales growth during March. Same-store sales growth was 1.2 percent for the month and 1.0 percent for the first quarter (average growth by month was 0.8 percent during the first three months of the year). The restaurant industry has posted four consecutive quarters of positive same-store sales growth for the first time since 2015.

Even if the news is encouraging for restaurants regarding sales growth, the results continue to disappoint when it comes to traffic. Same-store traffic growth was -1.8 percent during March.

Regional & Market Performance

Positive Markets 147 | 75% Negative Markets 49 | 25%

Strongest Region

  • Sales 2.87%
  • Traffic -0.38%

Weakest Region

  • Sales 0.03%
  • Traffic -3.21%

Restaurant sales performance was strong throughout the country during March. Of 196 markets tracked by Financial Intelligence (formerly Black Box Intelligence), 147 (or 75 percent) achieved positive same-store sales growth during the month. This represented a solid rebound for the industry after February, with bad weather hampering sales and only 44 percent of markets posting positive growth during that month.

The relative strength of the industry could also be perceived from a broader regional perspective in March. All 11 regions of the country saw positive same-store sales growth. This has only occurred four times during the last three years, all within the last twelve months.

The best performing regions based on same-store sales growth were the Southwest, Southeast and Western region. The worst performing were Mountain Plains, California and Florida.

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

Improved Consumer Confidence Fuels Restaurant Sales Momentum

Restaurant sales rebounded solidly during March, proving that February’s stumble was just an anomaly and not a reversal on the industry’s positive sales momentum. Same-store sales growth was 1.2 percent during March, a 1.9 percentage point improvement from last month’s -0.7 percent growth. Excluding February and its extremely bad weather, every month since June of 2018 has posted positive same-store sales. This 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 nearly $72 billion in annual sales.

Same-store sales growth was 1.0 percent during the first quarter of the year, the fourth consecutive quarter of positive growth for the industry.

“Chain restaurants have a lot to be optimistic about given these latest results,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence (formerly TDn2K). “The sector is going through its longest period of sales expansion for comparable stores since 2015. We have been seeing signs that point toward a longer-term recovery as well. March’s strong sales growth did not come at the expense of a soft comparable month from 2018. Last year March sales grew 0.6 percent. This means same-store sales grew by 1.8 percent when compared with March of 2017. The industry is finally posting consistent positive growth on a two-year basis. Since October, all months have achieved positive two-year sales growth with the exception of February. Before that period, restaurants went through twenty-two consecutive months in which sales were not able to top where they were two years before.”

There are several factors that seem to be impacting this period of expansion. From a macroeconomic standpoint, growth has been encouraging in recent quarters. Tight labor markets have been accelerating wage increases and consumers remain optimistic about their conditions. From an industry perspective, net growth in the number of restaurant locations has slowed in recent years, especially among fast casual and casual dining chains. This has undoubtedly helped mitigate the oversupply problem the industry has experienced for the past decade. In addition, many chains have been embracing and adapting to changing consumer preferences pointing towards off-premise consumption of food as a growing trend and an important source of potential restaurant sales growth. Top performing brands have also recognized there are growth opportunities beyond the traditional lunch and dinner dayparts,” said Fernandez.

Restaurants Still Relying On Larger Checks To Grow Sales, Amid Traffic Decline

As a whole, restaurants have been relying on their guests to spend more than they did a year ago as a key to increasing their same-store sales. Growth in average check was 3.0 percent year over year during March. The pace at which guest checks are growing has also been accelerating year over year. On average, guest checks have grown by 3.0 percent since the fourth quarter of 2018. By comparison, the average was 2.4 percent for the first three quarters of last year. This may be a consequence of accelerating wage growth and a consumer that is relatively more confident and willing to spend.

Average spending per guest is crucial because the number of guests keeps declining for chain restaurants. Same-store traffic was -1.8 percent during March, while traffic growth for the first quarter of 2019 was -2.0 percent.

Limited Service Brands Led Industry in Sales Growth in March, Fine Dining Best in Q1

The strength in restaurant sales was widespread throughout the industry in March. Most industry segments were able to achieve positive same-store sales growth. The best performing segments were those in the limited service category: quick service and fast casual. Both had strong sales growth during the month and the first quarter of the year. Casual dining and upscale casual round up the list of segments with positive sales growth during March.

Only two segments, fine dining and family dining, experienced same-store sales decline in March. However, there may be an explanation for their disappointing results. This year, Easter is in April, and in 2018 the holiday fell on the last week of March. Last year’s results benefited from the jump in sales that Easter brings for these segments, while those incremental sales dollars were not yet accounted for in March of this year. In the case of fine dining, even though the first four weeks of the month had positive sales growth, the downturn due to the holiday shift during the fifth week in March was enough to bring the entire month into negative sales growth. But fine dining concepts shouldn’t worry too much about March’s results; it was the top performing segment based on same-store sales growth during the first quarter of 2019.

Strong Personal Income Growth Expected to Fuel Solid Sales for 2019

The economy continues to expand at a moderate pace and there are indications the deceleration we have experienced over the past year is stabilizing. “Consumer confidence remains high and there was a rebound in vehicle sales, signs that the worst may be behind us,” stated Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence (formerly TDn2K) economist. “When it comes to consumption, though, one concern has unexpectedly arisen: wage growth moderated recently. However, the pressures on compensation remain great given the low unemployment rate and the continued solid hiring. Indeed, additional increases in minimum wages have been announced. The likelihood is that the slowdown in income growth was temporary.”

“The outlook is for continued good income growth the rest of the year, which should translate into solid retail sales and restaurant spending. The only risk to this positive outlook is receding world growth. If the trade issues are not resolved soon, the faltering global expansion would restrain U.S. growth. However, the expectation is that an acceptable trade agreement with China will be announced, removing the greatest risk to U.S. growth.”

Favorable Economy Keeps Hurting Restaurant Labor Market

Favorable economic conditions may have translated into growing sales for restaurants, but they have also created a labor market in which it is increasingly difficult to keep those restaurants staffed to support those growing sales. According to Workforce Intelligence (formerly People Report) data from Black Box Intelligence (formerly TDn2K) published through the Workforce Index, 50 percent of restaurant companies expressed increased difficulty in finding and hiring qualified hourly employees during the first quarter of 2019 compared with the previous quarter. 51 percent of companies reported increased difficulty in finding qualified managers. “It is important to keep in mind these recruiting difficulty numbers are compounding rapidly. The percentage of companies reporting increased challenges hiring employees and managers has been as high as 70 percent in recent quarters. So what most restaurants are really saying is, it’s getting harder to find enough qualified employees today compared with the previous quarter, even though it was pretty hard to find them back then too,” explained Fernandez.

One of the key factors behind these rising staffing difficulties is the industry’s need to constantly replace so many of its employees due to historically high turnover rates. Rolling 12-month turnover rates increased once again for restaurant managers and hourly employees during February, according to Workforce Intelligence (formerly People Report)’s latest numbers.

Fernandez concluded, “The importance of service cannot be overstated as a key differentiating factor for top performing restaurant brands per ongoing Black Box Intelligence (formerly TDn2K) analysis. We constantly see a strong pattern in which adequate staffing enables a service experience that translates into improved sales and traffic.”