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Technomic: Sales rose 2.6% in August

But the sales came from higher prices as the industry continues to face traffic challenges.
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Sales rose 2.6% in August, according to the latest Technomic Chain Restaurant index, in the industry’s best performance since April.

Traffic was flat, meanwhile, ending three straight months of declines, according to the index, which measures total sales and traffic at the country’s 200 largest restaurant chains.

Still, it demonstrates that chains are winning by getting customers to pay more for their food, or make larger orders, rather than coming into the restaurants more often. “It’s clear that chains are continuing to struggle with traffic,” said Sara Monnette, vice president of innovation with Technomic, a sister company of Restaurant Business.

For instance, she said, average transaction size in August rose 2.8%. “Increasing menu prices and getting customers to trade up when they do visit is helping prop up sales growth,” Monnette said.

The Technomic index compiles information from Technomic’s Transaction Insights, which collects data from 3 million customers and nearly 20 million restaurant visits. It is based on sales at the 200 largest restaurant chains according to the Technomic Top 500 Chain Restaurant Report.

The index measures total sales, factoring changes in unit count.

Chain restaurants in particular have continued to struggle to generate traffic this year despite an improving economy and evidence that consumers are spending more overall—suggesting that the industry is oversaturated after years of expansion and the entrance of new competitors.

While the August numbers were better, according to Technomic, they also came during a month when comparisons were notably easy—Hurricane Harvey last year hit the Houston area, diminishing sales in one of the country’s biggest markets.

Sales at casual-dining restaurants, which have been closing locations in recent years, were down 0.9% in August. That was the sector’s best performance since a 1.9% increase in April.

Traffic was down 4.2%, which also was the best performance for that sector since April.

Fast-casual restaurants also had their best performance since April, with sales up 5.2% and traffic up 0.2%.

“We continue to see cracks in the armor overall, but August was very solid for fast casual compared to earlier this summer,” Monnette said. Chipotle had a good month, she said, as did companies like Panda Express, Wingstop and Jersey Mike’s, all of which showed their strongest year-over-year traffic growth of 2018.

Quick-service chains, meanwhile had the best traffic of any single sector, up 0.4%, while sales rose 3.3%. Fast-food chains such as McDonald’s, Burger King, Wendy’s and others have been aggressive on competing for traffic by keeping prices down.

Midscale restaurants, otherwise known as family dining, had a 1% decline in both sales and traffic, according to the index.

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