Restaurant industry traffic increased in March after slowing down since October, as consumers returned to a more normal state after months of pulling back, according to the newest Technomic Chain Restaurant Index.
Total sales among the 200 largest restaurant chains rose 6% in the month, according to the index, while traffic rose 2.7%.
Restaurant traffic accelerated versus February, the first time that’s happened since October.
Technomic Chain Restaurant Index
“March saw a healthy increase in traffic over February,” says Sara Monnette, vice president, innovation, with Technomic, a sister company of Restaurant Business. On a same-store sales basis, she says, “Traffic is still quite flat, but the nice uptick in March helped to end the quarter on a higher note.”
Monnette, however, is not ready to call the first quarter good overall. “Some brands are really struggling,” she says.
The index measures sales from the 200 largest restaurant chains, based on the Technomic Top 500 Chain Restaurant Report. The index uses data from Technomic Transaction Insights, which collects information from 3 million customers and nearly 20 million restaurant visits.
The index measures total industry sales, so it takes into account changes in unit count and can be different from some of the same-store indexes released every month.
Monnette says that consumer confidence remained “very strong” in March and improved in April. Retail spending was up for the month, and there is typically a strong correlation between that and restaurant spending.
In addition, she says, “Consumers were likely cutting back at restaurants in order to limit spending after the holidays or to stick to post-holiday healthy eating routines.”
In March, however, “Consumers began to return to more of their typical consumption behavior.”
In addition, she says there could have been some “pent-up demand” after a weak first two months of 2018.
The strongest performance in March came from quick-service chains, where sales increased 7.2% and traffic rose 3.4%.
Quick-service concepts, which include perpetually strong performers Domino’s and Chick-fil-A, have been generating sales from consumers constantly looking for more convenience.
On the other hand, fast-casual chains continued to slow. Their sales rose 6.5%, and traffic increased 1.5%. Both numbers were down from their January and February figures, and illustrate the continued challenges some of the larger concepts are facing as they mature.
Monnette noted that smaller fast-casual chains are doing better than larger concepts. “I just don’t think the larger fast casuals can sustain the same growth rates once they hit a certain size,” she said.
Casual- and fine-dining chains had the slowest sales growth in the month, 2.1%, while traffic fell 2%.
But both numbers accelerated from February, when sales fell 1.2% and traffic declined by 4%. They point to a potentially improved market for the casual-dining sector.
3At the same time, sales increased 3.3% at midscale, or family-dining concepts, while traffic increased 2.8%. The chains include older concepts such as Denny’s and IHOP as well as newer restaurants such as First Watch.
Many casual-dining chains in the Top 200 “are still hurting,” Monnette says. But some of those chains turned a corner in March.
“I’m cautiously optimistic that this set of casual-dining chains that have been struggling for so long is starting to turn a corner,” she says.
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