Restaurant sales improved last month and so did traffic, at least at major chains. But fast-food chains are still struggling to lure customers.
At least that’s based on a reading of restaurant sales and traffic reports.
According to federal data, overall sales at restaurants and bars increased 1.8% in March, compared with February, and were up 4.8% for the year, an improvement compared with numbers in recent months showing some industry weakness.
Traffic at large restaurant chains was flat in March, according to data from the technology company Circana. That was an improvement from the 4% decline in February. Placer.ai data, meanwhile, suggests that fast-food traffic stabilized in March.
Traffic at quick-service chains declined 0.7% in the first quarter, according to Revenue Management Solutions. That firm was less bullish on March numbers, however, suggesting that traffic peaked in January only to stumble in both February and March.
That said, McDonald’s appeared to see traffic improvements in March that spiked this month after the company unleashed its Minecraft Movie promotion on the world.
One way or the other, the first quarter can be expected to finish weaker than many in the industry expected going into the year. Chipotle largely confirmed that on Wednesday, reporting its first quarterly same-store sales decline in nearly five years. Jack in the Box, too, confirmed that by reporting a 4.4% same-store sales decline at its flagship concept plus a 3.6% decline at Del Taco, which it now wants to sell.
Weather certainly had plenty to do with it, particularly in California where fires burned much of Los Angeles. It’s hard to serve burritos or cheap tacos when your restaurant is engulfed in flames. Or perhaps when your restaurant is buried under heaps of snow, which is what happened in the South in February.
Yet executives had suggested that something else was at work in pulling down restaurant sales beyond weather. Consumer confidence plunged. President Trump announced sweeping new tariffs and the stock market lost trillions in value. All that tends to inject fear into consumers and could prevent restaurant spending.
At the same time, better weather in March could give consumers plenty of reason to dine out again and restaurants in some respect can be a relief from all the noise going on everywhere else. So it certainly wouldn’t be surprising to see a consumer that unleashed a bit of pent-up demand last month.
The question is what happens from here. Weather is no longer quite the same benefit. There remains considerable economic uncertainty and the prospect of tariff-driven price hikes remains very real. Technomic has cut its expectations for restaurant sales this year based largely on these issues.
But at least last month, it seems, some of the early-year challenges appear to have eased, at least for now.