Dallas, November 8: Off-Premise sales continues fueling growth, while third-party delivery is an important factor to beat recession shows a report of Black Box Intelligence™ data from TDn2K™, based on weekly sales from over 31,000 and $72 billion in annual sales.
In October, the industry was able to post its second consecutive month of small positive same-store sales growth at 0.1 percent. In addition, reversing the trend of negative year-over-year sales growth reported for July and August is welcomed news for the industry and consumer spending.
Even if overall sales in comparable stores achieved some growth during October, it was entirely due to off-premise sales growth. This has been one of the most persistent and important shifts that we are tracking. The norm for the industry is now declining dine-in sales growth offset by very strong to-go and other forms of off-premise sales.
“The restaurant industry is holding its ground surprisingly well when it comes to sales in the most recent months. The reason has been the acceleration in guest checks year over year. Consumers have signaled they are willing and able to spend increasingly more every time they eat out,” said Victor Fernandez, Vice President of Insights and Knowledge for TDn2K.
Third-party delivery through mobile apps and well-coordinated online logistics and transport operators is undoubtedly playing a part in this shift, driven by the rapid adoption rates by the industry of this new sales channel. The survey shows 86 percent of restaurant companies currently use some form of third-party delivery, up from 82 percent at the end of 2018. And, perhaps more telling, 86 percent of those restaurant companies that currently don’t use it are planning to implement third-party delivery within the next twelve months.
Family and Upscale Dining are Best Performing Segments, Casual Dining Hurting
The fine dining and family dining segments continued to achieve positive same-store sales growth during October. Upscale casual rounded up the list of best performing segments based on same-store sales growth during October. The latter had been struggling through declining sales growth for most of the year, but experienced a strong rebound helped in part by a weaker comparison in October of 2018.
After a strong 2018, casual dining is experiencing a downturn this year. This segment was the worst performing based on sales growth during October. Casual dining has now endured four consecutive months of negative same-store sales growth.
However, it is undeniable that the restaurant industry is experiencing a significant slowdown in same-store sales growth since the second quarter of the year. “What is even more encouraging for the industry,” said Victor Fernandez, Vice President of Insights and Knowledge for TDn2K, “is that this small growth during the last two months has been achieved despite the industry lapping over two months with relatively strong performance in 2018. The industry’s two-year same-store sales growth continues to be positive and stable. The industry grew its same-store sales by 1.0 percent compared with October of 2017, while the average two-year growth for the previous six months is also 1.0 percent.
Traffic Growth Remains Top Concern
Same-store traffic growth was -3.1 percent during October, which represented a 0.2 percentage point drop from September’s result. October’s weak traffic has become the norm in the industry. Same-store traffic growth has averaged -3.2 percent for the seven months since the beginning of the second quarter.
Although the net growth in the number of chain restaurant locations has slowed in recent years, growth continues to be positive and is compounded year over year. The result is a highly saturated industry in which restaurant visits continue to get diluted among many possible options for diners. In this environment, same-store traffic growth continues to be a real challenge for operators.
Looking Ahead
When it comes to sales, the industry’s run to the finish line at the end of 2019 will be much more of a crawl than a sprint. Macroeconomic conditions are not very encouraging for anything but maintaining present consumer spending trends. Restaurant traffic continues to slowly vanish. Sales were relatively strong for the last two months of 2018 which means tougher hurdles when calculating sales growth in November and December this year.
The research report indicates, food delivery is on the rise and has played a significant role in affecting the performance of the restaurant industry. Your restaurant and dining business too can fetch good returns on off-premise sales with reliable food delivery mobile apps and restaurant table booking mobile apps. Panacea Infotech has extensive experience in providing cutting edge mobile app development solutions with integrated web development to support your app data. Connect with experts from Katalyst Technologies, Panacea Infotech’s parent company, for free to explore our Digital and Ecommerce solutions for your hospitality business and restaurant chains and ensure your millennial customers stay satisfied.
