There is little question that the restaurant industry generally recovered last quarter. According to a Restaurant Business analysis of sales data from the second calendar quarter, the median two-year same-store sales increase was a cumulative 7.6%. Few people, least of all this writer, thought we’d be at this position now.
There are, in short, a lot more winners than losers from the last quarter—which is what you’d expect when sales grow that much and the recovery is that much quicker than expected.
Still, we are here to do the difficult jobs. So we spent our morning looking at two-year same-store sales, calculated on a cumulative basis to give us a true picture of the industry’s total recovery. And we found some interesting dynamics.
Winner: Steak
It was a great quarter to be selling steak. The high-end steak chain STK had the best two-year same-store sales result of any restaurant chain we track—up 54% over the same period in 2019, which is just an incredible number that caused us to look multiple times just to see if we were correct.
It wasn’t just them. Just about anyone that sells steak, especially in a casual dining setting, saw a surge in sales last quarter as consumers apparently treated themselves to some seared beef. The typical steak chain saw sales up 13.5% over 2019. Take out the still recovering Capital Grille and it was 17.3%.
Loser: Urban concepts
Central cities remain the market hardest hit by the pandemic and remain the slowest to recover. The healthy fast-casual concept Freshii had the weakest two-year same-store sales last quarter, down nearly 29%.
Shake Shack, which has seen strong recovery, is still down 22% from where it was two years ago. Urban concepts have a tough recovery ahead as many employees are reluctant to work from home. The delta variant will likely prolong the work-from-home trend.
Winner: Pizza
Yes I did think that pizza delivery concepts would be hard-pressed to generate positive sales last quarter after people began returning to restaurants.
That they didn’t is a testament to the diverse recovery. Yes, consumers are splurging for steak. But they are still staying at home and ordering pizzas. Domino’s, Papa John’s and Pizza Hut all reported positive same-store sales last quarter. Papa John’s two-year same-store sales rose 35%. Domino’s 20%. Pizza Hut 9%.
Winner: Chicken
Yes, chicken won 2020. It is winning 2021, too. Wingstop’s same-store sales rose 35% on a two-year basis. Popeyes 25%. KFC 19%. El Pollo Loco 9%.
But that doesn’t even paint a true picture of the menu’s performance—Chick-fil-A, the biggest chicken concept in the U.S., doesn’t report its numbers publicly. And McDonald’s 15% same-store sales was fueled in part by its new chicken sandwich. The bird apparently rules the roost.
Loser: Varied menus
Generally, varied menu casual dining did not do well last quarter. Yard House, Seasons 52, BJ’s Restaurants and Red Robin all have a long way to go before they can recover from the pandemic. Applebee’s and Bad Daddy’s both recovered but underperformed.
Brewpubs in particular struggled. BJ’s same-store sales remain down 5% from 2019, while Granite City Food & Brewery was down 18%.
Winner: It’s Just Wings
Chili’s is arguably the best-known pioneer of virtual brands and there is considerable evidence that its investment in It’s Just Wings put a floor on its decline during the pandemic and sped its recovery since then.
On a two-year basis, the chain’s same-store sales rose 8.6%. That outperformed all its primary competitors. By comparison, Applebee’s was up 2.3%.
Winner: Jack in the Box
Few chains have enjoyed the sort of renaissance that Jack in the Box has enjoyed in recent quarters. Its same-store sales on a two-year basis rose nearly 18%--outperforming every other burger chain last quarter and one of the absolute best performances in the industry.
Loser: Burger King
The Miami-based burger chain did report positive two-year same-store sales. But the chain watched its two primary competitors, McDonald’s (15%) and Wendy’s (11%), more than recover from what they lost during the pandemic, while Jack in the Box thrived. The result has the company and its executives taking a hard look at the concept to get it turned around.
Loser: Sanity
Last quarter saw some insane numbers. STK’s same-store sales rose 726%. Kura Sushi’s 456%. Several casual diners were up well over 100% and a few close to 300%. Those numbers are important to keep track of but it’s difficult to get a real handle on how well they actually performed.
And so we calculated the two-year numbers ourselves to get a better comparison. Here is how we did it: We used the number 100 to stand in for 2019 and subtracted or added the 2020 same-store sales number from 100, then calculated the 2021 percentage from the result. The result of that calculation minus 100 is what we’ve used for a two-year figure.
Same-store sales are easily manipulated and, of course, the post-pandemic period is no different. Some chains could have closed their weakest stores, which could manipulate their ultimate numbers. Yet this still gives us a good idea of what happened.
And what happened was a stronger recovery than anyone expected.