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.”