Restaurant chain sales improved in June, but traffic continued to fall, according to the latest Technomic Index, as consumers shift more of their dining to smaller and independent concepts.
Same-store sales rose 0.2% in June, a 200-basis-point improvement over the 1.8% decline in May, according to the index, which measures total sales at the 200 largest restaurant chains using data from Technomic’s Transaction Insights.
Traffic during the month was better, too, but less so: Traffic declined 3.1%, an improvement from the 4% decline in May.
Traffic has fallen for two straight months after increasing by at least 1.2% the first four months of 2018.
“Loyalty is increasingly difficult for restaurants to capture from consumers because of the growing number of options and the pull of unique offerings at one concept or another that chip away at incremental visits to the 200 largest chains,” said Sara Monnette, the vice president of innovation with Technomic, a sister company of Restaurant Business.
The Technomic Index compiles information from Transaction Insights, which collects information from 3 million customers and nearly 20 million restaurant visits.
Casual dining is bearing the brunt of the consumer shift. Casual and fine dining chains’ sales declined 2.3% while traffic fell 6.1%.
That was the second straight month of weakness in the sector, which through April had shown steady improvement.
“When consumers go for a sit-down occasion, they are looking for a new experience,” Monnette said. “When you pit a major casual dining chain against a new independent or even fast casual with a fresh positioning and a value proposition, we are seeing more consumers say, ‘Let’s try that tonight.’”
But that phenomenon isn’t limited to casual dining.
Fast casual chains, which had largely led the industry’s growth in recent years, have seen a steady erosion in sales performance this year. Sales rose 3.2% at the concepts, which was an improvement over the 0.9% increase last month but which remained far below the performance from earlier this year.
Traffic, meanwhile, declined 2%. “We’ve seen a gradual slowdown in fast casual for several months,” Monnette said. “The segment as a whole is still outperforming but as the fast casual chains within our data set get bigger, growth certainly slows.”
She said that smaller fast-casual chains are seeing stronger growth, such as Naf Naf Grill, which grew by 58% last year.
Customers aren’t shying away from fast casual, she said, but “the space has become more crowded and the overall foodservice options more plentiful.”
Quick service chains’ sales rose 0.4% in June, while traffic fell by 3%. Midscale chains, or family dining chains’, saw a 1.6% decline in sales and a 1.5% decline in traffic.