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Report: Restaurants suffer negative Q1 growth after lagging March sales

With a -0.7 percent same-store sales growth, March represented the second worst month since February of 2014. Only January 2016, was slightly weaker at -0.8 percent sales growth.

April 19, 2016

Chain restaurant same-store sales fell in March, plunging into negative growth territory for the second time in the last three months, according to TDn2K's Black Box Intelligence through The Restaurant Industry Snapshot. At -0.7 percent same-store sales growth, March represents the second worst month since February of 2014. Only January 2016, was slightly weaker at -0.8 percent sales growth. The insight comes from data based on weekly sales from over 24,000 restaurant units, and more than 120 brands, which represents $61 billion dollars in annual revenue, said Victor Fernandez, executive director of Insights and Knowledge for TDn2K.

"In recent years March has typically been strong for restaurant sales, as weather becomes nicer at the beginning of spring, some pent-up demand from the winter months is probably acted upon, heating costs go down and spring breaks generate some additional spending," he said. "Average weekly sales per restaurant were between 9.0 and 10.0 percent higher than the average for the preceding six months for March 2014 and 2015. However, in 2016, the industry lift in average sales per week was only 8.0 percent higher than the average for the previous six months."

The weakness in March is also evident when looking at results from an aggregate two-year perspective. Although the Black Box Intelligence restaurant index was averaging over 3.0 percent same-store sales growth, over the previous six months on a two-year comparable basis, the two-year growth for March was only 0.7 percent.

With negative sales growth reported in two of three months, Q1 of 2016 broke the streak of seven consecutive quarters with positive same-store sales. Sales growth during the quarter was -0.4 percent, which represents a 0.8 percent drop from the rate reported for the fourth quarter of 2015.

"Although weather continued to be a factor in some regions of the country, the slowdown in restaurant sales appears to go beyond just that." said Fernandez. "It also goes beyond just a few brands or regions having a tough time." Out of all restaurant brands tracked by Black Box Intelligence, half reported negative same-store sales growth during Q1, up from 40 percent of brands reporting negative growth in Q4 of last year.

In addition, over 60 percent of brands reported data showing same-store sales growth worsening in Q1 compared with Q4 results. Finally, seven of the country's 11 regions posted negative same-store sales growth during Q1; as a comparison, only five and three regions reported decreasing sales in Q4 and Q3 2015 respectively.