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May 2019 sales rebound: TDn2K

Same-store traffic significantly down, showing long-term challenges

Blackbox May sales are positive, said TDn2K, in its latest sales reporting. Restaurant performance in May 2019 rebounded, posting a 1.1 percent same store sales gain. This data, derived from its Blackbox Intelligence product, uses performance from over 31,000 outlets and over 170 brands. The intelligence and data-analytics provider noted that the month lacked the storm turmoil and holiday seasonality that impacted April sales.

The rolling three-month same store sales increase posted a 0.5 percent gain. Still, same store traffic showed a 2.1 percent decline, compared to a three-month rolling basis of -2.6 percent.

Because of May negative same-store traffic, it’s too early to paint a rosy picture of the outlook despite positive Blackbox May sales, suggests TDn2K. Restaurants are generating Increases in sales from guest check increases (whether due to mix, price increases or order size)—something that’s not sustainable for restaurants in the long run.

By using two-year same store sales metrics (combining same store sales for the same month in consecutive years), however, analysts derive a slightly better picture. Only February, which was impacted by severe storms, posted a two-year same sales decrease.

Our two largest trading partners are being pressured and that affects business and consumer costs. But the issues are not limited to trade. Business fears of a tariff-induced slowdown are restraining capital investment.

Joel Naroff, Naroff Economic Advisors and TDn2K

Economic policies, indicators create unease

An uncertain U.S. economic environment, driven by global tariff tit-for-tat policies, creates downward pressure on restaurant performance. Job wage growth, notes TDn2K’s economist, may also be moderating. “After growing strongly for nearly a year, the economy has entered a period of significant uncertainty, created by the escalation of the use of tariffs to include not just China, but also Mexico,” said Joel Naroff, president of Naroff Economic Advisors and TDn2K economist.

“Our two largest trading partners are being pressured and that affects business and consumer costs. But the issues are not limited to trade. Business fears of a tariff-induced slowdown are restraining capital investment.”

Consumer spending inconsistencies prevail as job increases also look to be moderating, according to TDn2K economists. For that reason, Blackbox May sales, and particularly May same-store traffic numbers, show no reason to start celebrating or creating a new, positive trend line.

While it may seem that positive sames-store traffic may be elusive, TD2NK insists that is not the case. The firm observed that restaurant chains in the top quartile of Blackbox May sales performers are attaining dual positive same-store traffic performance. “…growing guest counts is possible; but it comes from a combination of staffing for excellent and consistent execution, a superior service experience at all levels, attention to detail and activating growth engines beyond traditional dine-in sales during lunch or dinner.”

Read the full analysis on the TDn2K website.

Photo credit: Nathan Dumlao

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