In the competitive restaurant industry, Wingstop and Domino’s stand out

News flash: The restaurant industry is competitive.

That’s the conclusion from an analysis of publicly traded restaurants’ early-year earnings reports. No single sector or service style or even menu item truly stood out. Instead, consumers picked their winners and losers from within those sectors and spent their money thusly.

Consider that, overall, the 62 U.S. restaurant chains that have reported earnings had an average same-store sales result of 0.43%.

Limited-service chains averaged a 0.58% increase, while full-service chains averaged 0.29% growth.

Breaking that down even further helps little. Fast-food chains averaged 1% growth. Casual dining concepts 0.4%. Both fast casual (down 0.34%) and family dining (down 0.4%) did average a decline. In both cases, a single concept pulled the sectors down from an otherwise normal showing.

To be sure, weather certainly influenced early-year results, especially at chains with heavy concentrations of locations in the Midwest or the Northeast. In addition, closures at some chains likely made those performances better than they actually were.

But consumers are voting for their favorite concepts with their checkbooks, which will certainly put pressure on others to make their offerings more favorable. Read on for the first quarter’s winners and losers.

No single publicly traded chain performed as strongly in the first quarter as did the Dallas-based fast-casual chicken wing chain reported 9.5% same-store sales growth in the company’s first quarter ended March 31.

To be sure, the chain was lapping a 1.1% decline from the year before. But nobody is going to take issue with an 8.4%, stacked two-year increase.

Charlie Morrison, the CEO of Wingstop, was the chief executive of Pizza Inn in 2011 when it debuted its fast-casual pizza concept Pie Five. The latter creation has been struggling in recent years as others jumped on that bandwagon.  

Pie Five’s same-store sales fell 12.6% in the fiscal third quarter ended March 25. That’s on top of a 15.8% decline a year ago, for a two-year stacked plunge of 28.4%. That’s not good.  

Talk about going out on top. Patrick Doyle, in his final full quarter as Domino’s Pizza CEO, was able to report an 8.3% same-store sales increase in the first quarter ended March 25. Only Wingstop performed better.

On the other end of the spectrum were Papa John’s (5.3% decrease) and Papa Murphy’s (3.9% decrease), which had two of the poorest performances in the early part of the year. The performance of those two chains compared with Domino’s and Yum Brands’ Pizza Hut (4% first quarter same-store sales increase) shows that consumers are picking and choosing their favorite concepts.

It’s difficult to look at the quarterly earnings reports and not think customers like steak. Stoney River Steakhouse (6.2% same-store sales growth), Texas Roadhouse (4.9%) and Outback Steakhouse (4.3%) were three of the strongest performers in the quarter.

While steak chains did well, the three chains in the Del Frisco’s Restaurant Group did not. Del Frisco’s Grille same-store sales declined 1.4%, Del Frisco’s Double Eagle declined 2.8%, and the struggling Sullivan’s was down 10.3%. Indeed, steak chains’ average same-store sales was 1% in the first quarter. Remove those three concepts and it’s nearly 3%.

Del Frisco’s is now trying to buy growth chains.

Hey, look, Applebee’s same-store sales increased 3.3% in the first quarter ended March 31, which parent company Dine Brands Global CEO Steve Joyce said should “put to rest false news about the death of casual family dining.”

Of course it’s not dead. But let’s not declare Applebee’s a winner yet. Keep in mind that this is a chain that has closed 84 locations over the past year, which probably helped its first quarter results. Oh, and on a two-year basis, Applebee’s same-store sales were still down 4.6%. And then its second-biggest operator filed for bankruptcy protection.

Chili’s in the first quarter reported a total, domestic same-store sales decline of 1.1%. That is seemingly 440 basis points behind its major rival, Applebee’s. But its two-year stacked decline was just 2.8%.

Chili’s is doing this on bigger average unit volumes, $2.8 million versus $2.3 million for Applebee’s.

While Applebee’s had a positive first quarter, it has a ways to go.

It sure seems like, at least for the moment, the entire burger world is looking up at Burger King and its 4.3% first quarter same-store sales growth, which bested rivals McDonald’s (2.9%) and Wendy’s (1.6%). What’s more, Wendy’s and chains such as Arby’s have started copying Burger King’s 2-for-$6 offer, while opting not to copy McDonald’s $1 $2 $3 Dollar Menu.

On the other hand, Steak ‘n Shake’s same-store sales declined 1.7% in the first quarter ended March 31, extending a two-year slowdown into its third year. Traffic, once the chain’s primary goal, declined by 7.2%. Oh, and the chain has been sued by a franchisee.

To us, the wide gap between traffic and sales suggests a chain that is perhaps shifting away from value while it courts higher-end consumers that are more profitable as operating earnings per location fell to just $1,000 last year.

But Steak ‘n Shake doesn’t hold earnings calls or talk to the press. So, we’re left to guess.