Restaurants had a good Thanksgiving.
Same-store sales rose 1% in November, according to the latest Black Box Intelligence index. That was the sixth straight month of growth for chain restaurants, a sign of a longer-term recovery for an industry struggling with three years of weakness.
Victor Fernandez, vice president of insights and knowledge for Black Box parent TDn2K, said that Thanksgiving week was particularly strong, thanks to takeout and catering sales. “The week of Thanksgiving had very strong growth in banquet, catering and to-go,” he said.
Takeout sales have been strong all year, in fact, as consumers have shifted how they’re dining at restaurants.
Same-store takeout sales are up nearly 9% year to date, according to Black Box, while dine-in same-store sales are negative.
Growth in delivery, and a focus in more takeout options are pushing chains in that direction. Consumers, spending more time at work and opting increasingly to take their restaurant food home with them, are demanding such options.
“Yes, consumers want to buy food from restaurants, they’re just not consuming it there all the time,” Fernandez said. He noted that even upscale casual and fine dining are seeing takeout growth. “For those brands that are relying on more of a sit-down experience at restaurants, that’s where you rethink that,” he said.
Yet, for all the industry’s growth in recent years, consumers are still dining out less and paying more when they do.
Same-store traffic declined by 1.9% in November, a modest 0.3% growth over October. To Fernandez, the industry’s recovery is not complete without growth in traffic. “That’s the key problem,” he said. “We’re really not solving that anytime soon based on everything we’re seeing.”
Still, the industry’s growth sets the stage for what TDn2K believe could be a relatively strong first half of 2019.
November’s 1% same-store sales growth, coming off a slight decline the same month a year ago, was nevertheless the second straight month of positive same-store sales on a two-year basis.
That suggests a better pickup for restaurant sales than it might appear. “That’s the relative strength in the industry that carries on through the end of the year,” Fernandez said., “We’re optimistic about the first half of 2019. We see it still having that relative strength.”
The economy is poised for a relatively strong holiday shopping season. Joel Naroff, president of Naroff Economic Advisors and a TDn2K economist, said that wage gains should sustain consumer confidence and keep consumers and therefore the economy spending. That should keep the restaurant industry strong.
But, he said, “growth is likely to decelerate as we go through the second half.”
That’s when the industry begins lapping the growth of the past six months. But it’s also due to economic uncertainties—particularly the threat that inflation could limit spending.
“There are a lot of signs of uncertainty there and we might start seeing some slowdown in the second half,” Fernandez said. “But overall we’re happy with what we’re seeing.”