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After a disappointing end to last year, 2014 began with the restaurant industry still showing signs of weakness as it continues to struggle with declining same-store sales and guest counts. This situation was exacerbated in January by the fact that once again, large regions of the country suffered from extreme winter storms that greatly impacted consumer spending in restaurants. This was reported by Financial Intelligence (formerly Black Box Intelligence) and Workforce Intelligence (formerly People Report) in the Restaurant Industry Snapshot for January, released this week.

Same-store sales growth in restaurants was -0.9% in January, the second consecutive month in which the industry has reported negative same-store sales. January did represent an improvement of 1.1% versus the -2.0% reported for December 2013. “The industry continues to be locked in a market share battle in which the number of guests in comparable stores has been steadily declining since the recession and there are no signs of that trend reversing any time soon”, commented Victor Fernandez, executive director of insights and knowledge for TDn2k, parent company of Financial Intelligence (formerly Black Box Intelligence).

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Same-store traffic growth of -2.2% in January, was the second worst growth rate for traffic reported since July of last year. Only December 2013 was worse. “Although the -2.2% January same-store traffic growth is concerning for the industry, it did represent a significant 2.3% improvement over the dismal negative 4.5% reported for December”, continued Fernandez. “The fact that many consumers in some of the most heavily populated areas of the country were not able to go out to eat as much as they’d like due to the weather is definitely not helping the industry’s results. The impact is particularly evident when considering that the three worst performing regions in the country during January – New York/New Jersey, the Midwest, and the Mid-Atlantic – were all the hardest hit by the winter storms.”

The best performing region in January was Florida, reporting same-store sales of 3.3% coupled with positive same-store traffic of 2.1%. It was one of only four regions that achieved positive guest count growth during the month. Not surprisingly, all of these regions are in warmer parts of the country.

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The Restaurant Willingness to Spend Index, published by Consumer Edge Research, posted a value of 94 for January, a 1 point drop from the December index value. “Over the last 6 months, this index has been suggesting a more confident consumer who is saying they are much more willing to spend in restaurants than in recent years”, said Fernandez. “However, we are yet to see that translate to additional spending due to the many environmental factors experienced over the last months”. Looking at the bigger picture regarding consumer confidence, the Thomson Reuters/University of Michigan index, which reported the biggest gain in three years at the end of 2013 and also dropped slightly in January. As the latest reports indicate personal incomes stagnating and consumer sentiment dropping, February may find the consumer holding back on their spending.

The latest data published by Workforce Intelligence (formerly People Report) reports that the restaurant industry continues to add jobs to the economy at a healthy pace. December year-over-year growth in restaurant jobs was 3.2%, only a slight downtick from the 3.4% reported for November. As new jobs continue to be created, the additional pressure of turnover is emerging as an issue for employers. Turnover continued to inch up for both restaurant managers and restaurant hourly employees on a rolling 12-month basis in December.