Financing

Technomic: Sales slowed in May

After a strong start to 2018, traffic weakened and sales followed suit.
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Traffic weakened in May, and that pulled restaurant sales down during the month, according to the latest Technomic Chain Restaurant Index.

Total restaurant sales declined 0.7% in May, according to the index.

Traffic was the biggest problem, declining 3.3%. Customer counts fell in all sectors during the month.

The figures represented a dramatic slowdown from April, when sales rose 7.4%. The results suggest that the strength the industry experienced in the early part of the year came from consumers who unleashed some pent-up demand, and who have pulled back into their previous dining habits.

Then again, it’s just one month. “Traffic and sales cooled quite a bit in May,” says Sara Monnette, vice president of innovation for Technomic, a sister company of Restaurant Business. “It’s too early to say if the blip we saw in May will continue, but I don’t believe we will see the same strong growth numbers that we saw the first few months carry us into 2018.”

The Technomic Chain Restaurant Index measures total sales, taking into account changes in unit development, among the 200 largest restaurant chains as measured by 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’s results were particularly disappointing for casual dining, which had enjoyed a modest comeback of sorts earlier this year. Sales declined 4.6% in May at casual- and fine-dining restaurants. And traffic declined 7%.

Sales fell 3.9% at family-dining restaurants, with traffic down 3.5%.

Limited-service chains fared better, continuing the industry’s trend toward more convenience-oriented options, but those chains likewise struggled.

Sales increased just 0.2% at fast-casual restaurants, with traffic down 3.7%.

Quick-service sales rose 0.4%, with traffic down 2.8%.

The overall decline in traffic continues a problem that has beset the industry in recent years. Traffic has been difficult for restaurant companies to come by despite a growing economy, with lower unemployment and rising wages.

But consumers have more choices for their dining than ever.

Monnette notes that 63% of consumers say they are spending the same amount on foodservice but are visiting a wider variety of places.

“There are ever more options for consumers, including enhanced prepared meals and snacks from grocery and convenience stores that continue to chip away at occasions,” she says.

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