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Restaurant sales robust thanks to warm weather conditions

Restaurant sales robust thanks to warm weather conditions

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Same-store restaurant sales increased 2.3% in January, the best growth in over four years, and it was all due to mild weather conditions and historic warm temperatures.

That's a prime finding of a Black Box Intelligence report tracking weekly sales at over 47,000 restaurants.

Yet the sales boost isn't an accurate view of the strength of the industry, according to Victor Fernandez, vice president of insights and knowledge at Black Box Intelligence.

"Winter has been mild during the first month of the year and headlines from different parts of the country mention historically warm temperatures for January. This seems to be the factor most responsible for the boost in restaurant sales experienced during the month," said Fernandez in a press release on the report.

According to the report, five regions achieved same-store sales growth over 4% and all are areas that typically would have experienced extreme weather during January: the Mid-Atlantic, New England, the Midwest, New York-New Jersey and Mountain Plains.

Yet while warm weather is clearly boosting industry sales, guest counts are not as healthy, noted the release. Same-store traffic growth was down minus 0.7% in January.

The top performing segments, in sales growth, were upscale casual, casual dining and fine dining. The lone two segments experiencing same-store sales less than 1% were fast casual and quick service, according to the report.

The current coronavirus outbreak may play a factor in the next few months, according to the release.

"The wild card in the outlook is the uncertainty over the impact on world economic growth of the coronavirus. It will slow global activity as long as it remains unchecked," said Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence economist, in the release.

"Thus, the next quarter or two could be soft. But that doesn't mean consumer demand, including eating out, will fade. Consumer confidence remains extremely high, the unemployment rate is at historic lows and while wage increases are moderating, they are still decent. Thus, the forecast for modest gains this year in restaurant demand remains in place."

The report also noted that a top concern for restaurant operators is staffing and pressure in recruiting in a tight labor market. Restaurant employment grew by 2.3% year over year during December.

That's a critical element given staff customer service is viewed as the prime competitive factor among top performing restaurant brands — well ahead of value, food options and even restaurant setting ambiance, according to the release.

Topics: Business Strategy and Profitability, Staffing & Training, Trends / Statistics

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