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Black Box: Sales rebounded with the weather in March

But traffic remains weak as the industry relies on price to generate sales.
Photograph: Shutterstock

Same-store sales rose 1.2% in March, according to the latest Black Box Intelligence Index, as sales rebounded last month from February’s struggles.

Outside of the 0.7% decline in February, same-store sales have been positive in every month but June. And same-store sales in the first quarter of 2019 rose 1%, the fourth straight positive quarter.

“Chain restaurants have a lot to be optimistic about given these latest results,” Victor Fernandez, vice president of insights and knowledge at Black Box parent company TDn2K, said in a statement. “The sector is going through its longest sales expansion for comparable stores since 2015.”

Yet that sales expansion is still lacking traffic.

Same-store traffic declined 1.8% in March and 2% in the first quarter—meaning that restaurants are still losing customers.

Those customers who are going in are either buying more expensive items or paying higher prices. Average check in March was up 3% year-over-year.

Still, Fernandez noted that same-store sales are up consistently and are coming on top of positive months. On a two-year basis, for instance, same-store sales in March were up by 1.8%. Two-year same-store sales growth has been positive every month since October, outside of February.

“Before that period, restaurants went through 22 consecutive months in which sales were not able to top where they were two years before,” Fernandez said.

Economic growth has been encouraging in recent quarters. Wage and incomes have started moving higher, which could be helping the industry generate sales.

And chains have slowed their growth in recent years, which could be helping same-store sales by easing concerns about oversupply.

And chains could be adapting to changing consumer preferences by focusing more on off-premise sales, Fernandez said.

Joel Naroff, president of Naroff Economic Advisors and TDn2K’s economist, said that strong personal income growth should fuel solid sales this year. “Consumer confidence remains high and there was a rebound in vehicle sales, signs that the worst may be behind us,” he said in a statement.

“The outlook is for continued good income growth the rest of the year, which should translate into solid retail sales and restaurant spending.”

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