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The year ended on a negative note for the restaurant industry as December was plagued by severe winter storms and a shortened shopping season due to a late Thanksgiving. The latest results published by Financial Intelligence (formerly Black Box Intelligence) and Workforce Intelligence (formerly People Report) through the Restaurant Industry Snapshot for December, released this week, show December pushed Q4 same-store sales performance into negative territory for the industry. “On an aggregate level, 2013 was not a good year for the industry which posted slightly negative same-store sales but more importantly, suffered through its third consecutive year of deteriorating same-store traffic growth”, said Victor Fernandez, Executive Director of Insights and Knowledge for Black Box Intelligence (formerly TDn2K), parent company of Financial Intelligence (formerly Black Box Intelligence) and Workforce Intelligence (formerly People Report).

Same-store sales were -2.0% in December, a significant 2.8% drop from the growth rate reported for November. “There are several effects that combined to push down same-store sales during December”, continued Fernandez. “First, there is the effect from Thanksgiving being tallied in December sales for 2013 which hurt same-store sales for those segments that typically have lower weekly sales due to that holiday, such as Casual Dining and Upscale/Fine Dining. Furthermore, the late Thanksgiving meant that the holiday shopping season got compressed and thus, we had one week less of people eating out while shopping. The final blow for the industry came from the winter storms that hit vast regions of the country starting with the week after Thanksgiving. This resulted in sales during those prime weeks of activity being severely hurt.”

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Fourth quarter same-store sales were again negative at -0.2% as a result of the December downturn, which reversed the positive same-store sales trend experienced by the industry since September. With these latest Q4 results, the industry has now posted two consecutive quarters of negative same-store sales and with the exception of Q2 (which saw modest same-store growth of 0.7%) all other quarters of 2013 experienced a decline in their same-store sales. “However, even in this tough environment there are brands that have been very successful, especially in the Fast Casual and Family Dining segments, which both posted positive same-store sales during Q4”.

Annual same-store sales for 2013 were -0.1%, a 1.0% drop from the 0.9% reported for 2012 and the first time since 2010 that Financial Intelligence (formerly Black Box Intelligence)’s index has resulted in negative same-store sales for the year. “This is obviously discouraging news for the industry after two consecutive years of same-store sales around 1.0%,” said Fernandez. “This speaks to the fragile state of consumer confidence and continues to highlight the problem the chain restaurant industry has when it comes to driving traffic”.

Same-store traffic took a dive in December with a growth rate of -4.5%, a considerable 3.8% drop from the November growth rate. The last time the industry posted positive guest count growth in comparable stores was February of 2012. As a result, Q4 reported same-store traffic of -2.4%, which is 0.6% worse than the growth rate reported for Q3. “Weather continues to be a major force behind the industry’s results, as shown by the fact that over the last 2 years the only two quarters with traffic growth below -2.0% have been Q4 2013 and Q1 2012”.

Annual same-store traffic was -2.1% for 2013, a 1.1% decline from the growth reported for 2012 and a 1.3% drop from same-store traffic for 2011. Since the end of the recession this is the first time Financial Intelligence (formerly Black Box Intelligence) has reported on two consecutive years of worsening same-store traffic growth for the restaurant industry.

There are some encouraging signs for the industry, however, in the fact that the Restaurant Willingness to Spend Index published by Consumer Edge Research improved from its November value and continues to indicate there is renewed confidence in consumers and some pent up demand that could translate into increased sales. The Restaurant Willingness to Spend Index climbed 2 points to 95 in December, which is the highest value for the index in over two years and the 5th month since July that the index has crossed the 90 point mark. “Although this is positive news and normally would indicate that January will see strong same-store sales, the effect of the weather might again disrupt this trend.”

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The best performing region in the country during Q4 was the Western region for the second consecutive quarter with same-store sales of 1.5% and traffic of -1.1%. The fact that this region also had negative same-store traffic growth during the quarter highlights the fact that this is a problem that is widespread and falling guest counts continued to affect all regions of the country in Q4. The worst performing region during Q4 was New York-New Jersey with same store-sales of -2.7% and traffic of -4.5%. Of the four worst performing regions in the country in Q4, three (New York-New Jersey, Mid-Atlantic, and New England) are in the northeastern part of the country.

According to the latest numbers from Workforce Intelligence (formerly People Report), on the employment front things continue to heat up for the industry, as restaurant companies rely on openings to fuel growth. The number of restaurant jobs grew by 3.4% in November year-over-year, up from the 1.8% reported for October. At the same time, turnover for both restaurant managers and hourly employees continued to inch up in November and on a rolling 12-month basis. Workforce Intelligence (formerly People Report)’s Workforce Index for Q4 2013 indicates expectations for an increasingly tough environment during the beginning of 2014 when it comes to recruiting and retention for restaurants.