Black Box: What polar vortex? Restaurant sales improve in January

Surprising strength suggests the industry’s recovery might finally be gaining some traction.
Photograph: Shutterstock

So much for the idea that cold weather and a government shutdown would keep consumers from restaurants.

Same-store sales rose 2% in January, according to the latest Black Box Intelligence index. That was on par with a relatively strong December number and was the eighth straight month of growth for an industry that appears to be trudging its way out of its long slump.

Traffic declined 0.7%, however, so restaurants are generating sales these days through price increases and fewer discounts. But even that provided some hope: It was a slight improvement over December, and the past two months have represented a sizable improvement over the figures from much of the past three years.

The improvement was something of a surprise given the headwinds restaurants faced last month—notably a government shutdown that cost 800,000 government workers, plus many more contractors, paychecks in the first half of the month. In addition, frigid weather hit much of the U.S. toward the end of the period.

“A lot of factors were going against the industry that month,” said Victor Fernandez, vice president of insights and knowledge for TDn2K, parent company of the Black Box index. “Given the magnitude of the bad weather on top of the government shutdown, you’d think it would have had a bigger effect.

“The relative strength of the industry continues.”

The Black Box index is compiled from weekly sales at more than 170 restaurant brands that have 31,000 locations and generate nearly $72 billion in sales.

Some factors were in favor of the industry in January. For one thing, this year’s index includes New Year’s Eve, a big restaurant day. And comparisons were easy.

Yet even with that easy comparison, industry sales were positive overall on a two-year basis. “Now we’re actually seeing growth” over two years, Fernandez said. “So the positive momentum is here.”

And there are other signs of an industry pickup over the past two months—notably, restaurants added 80,000 jobs in December and January combined. That suggests an industry expansion. At the same time, the overall economy has been adding jobs at a growing rate in recent months, which might be providing some fuel for industry sales.

It’s possible that the industry slowdown over the past three years was something of a correction after years of aggressive expansion that might have saturated the U.S. with chain restaurants.

Overexpansion has been a major factor in same-store sales weakness recently. “People are not abandoning the chain restaurant industry,” Fernandez said. “They’re coming in a little more. But there are too many options.”

Yet over the past two years, casual-dining chains have closed restaurants, and others have slowed their growth to combat weakening unit economics. And fast-casual concepts have clearly slowed their growth more recently amid their own sales challenges.

“Definitely all of that is helping,” he said. “But it’s easy to say that from our perspective.”

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.


Exclusive Content


Why MOD Pizza is not out of the woods yet

The Bottom Line: The fast-casual pizza chain was sold last week to Elite Restaurant Group. But few who’ve seen the finances believe the company can avoid closing large numbers of stores.


Restaurants have a hot opportunity to improve their reputation as employers

Reality Check: New mandates for protecting workers from dangerous on-the-job heat are about to be dropped on restaurants and other employers. The industry could greatly help its labor plight by acting first.


Some McDonald's customers are doubling up on the discounts

The Bottom Line: In some markets, customers can get the fast-food chain's $5 value meal for $4. The situation illustrates a key rule in the restaurant business: Customers are savvy and will find loopholes.


More from our partners