Restaurant sales and traffic plummeted during July, as the slowdown in growth continues for the industry. July in particular has been problematic for the industry in recent years, as consumers appear to be shifting some of their spending away from chain restaurants during this month. This spending shift is frequently linked with leisure and summer vacations. July's same-store sales growth of -1.0 percent was the worst posted by the industry in almost two years according to Financial Intelligence (formerly Black Box Intelligence).
The latest guest sentiment results reveal that guests have been less positive about their restaurant experiences in the last three months compared to the same period a year ago, based on data for two key attributes, service and ambiance, tracked by Black Box Intelligence (formerly TDn2K)'s Guest Intelligence (formerly White Box Social Intelligence).
Sentiment on chain restaurant food and beverage has been improving year over year, but Black Box Intelligence (formerly TDn2K) analysis continuously highlights that these are not the aspects of the restaurant experience that drive the biggest differentiation for the top performers based on same-store sales growth. Part of the reason may be that we are seeing improvement in food and beverage sentiment across the board for the industry overall.
Analysis by Black Box Intelligence (formerly TDn2K) has shown, in the current environment, brands with the most success in the marketplace are not necessarily leveraging their food or beverage offerings to differentiate from the rest. This may be counterintuitive, especially when talking about what restaurants do in the most basic of terms. After all, they sell food and beverages to their guests.
This does not mean, however, that food and beverage are not important to guests. What the data suggests is there is little difference in guest perception between the food and beverage of top performing brands compared to the rest of the industry. It is important to mention that those top performing restaurant brands are typically able to grow their comparable guest counts amid this downturn in traffic experienced by the rest of the industry.
So what are the differentiating factors for those top performing brands? What are their guests perceiving as better in terms of what they experience that they are rewarding with incremental visits and sales dollars?
Black Box Intelligence (formerly TDn2K) results from the second quarter highlighted once again that service and ambiance remain the two key areas of the restaurant experience that most differentiate top performing restaurant brands.
Furthermore, these attributes are key differentiators across industry segments. So although the expectation of service and ambiance may be different for the same guest when visiting the quick service restaurant closest to their workplace or their favorite casual dining spot for dinner with the family, those different expectations better be met by each restaurant if they are to be successful and win the market share battle.
As has been the case recently, all regions of the country experienced over 50 percent of all their restaurant-related mentions and reviews classified as positive during July. The region with the most positive sentiment, once again, was Florida. This was the only region that achieved over 60 percent positive mentions during the month.
The regional data reveals that, at a high level, restaurants are doing a good job improving guest sentiment. However, it simply may not be happening in the key areas of service and ambiance. Nine of the eleven regions of the country experienced more positive guest sentiment in July compared with the average for the previous three months.
As has been common in the past, guests in the New York-New Jersey and New England regions rated their restaurant experiences in less positive terms than the rest of the country. Finding California among the least positive regions was different for this month.
The Restaurant Guest Satisfaction Snapshot is produced by data from Guest Intelligence™, a Black Box Intelligence Product™. Guest Intelligence is tracking over 192 brands to benchmark customer satisfaction and is the only online tool that integrates with operational performance data to validate the impact on financial performance. The algorithm determining ranking brands is based on sentiment and determined by White Box Social Intelligence. Brands included in this monthly snapshot must have a total of at least 250 mentions for the month. Restaurants must have a minimum number of units to be eligible as well. DMA rankings consider only the largest 25 areas.