March restaurant sales nosedive provides glimpse into COVID-19 impact: Black Box report

Comparable restaurant traffic plunges 29.2 percent

Analytics firm Black Box Intelligence reported March restaurant comparable sales were down 28.3 percent industry-wide. The COVID-19 health crisis has forced a considerable drop in sales among restaurants as they are challenged to survive in takeout mode. Comparable sales traffic was down 29.2 percent. Quick-service restaurants were part of the most resilient segment in March, but comparable sales were down across the board.

Markets that have some of the most dense populations and those that were hardest hit by the epidemic fared the worst. New England posted the worst comparable sales, down 32.5 percent. There, comparable traffic was down 33.1 percent. New England, the Western region, New York-New Jersey, the Mid-Atlantic, and California were down more than 70 percent during the last week of March. These markets are also within the territories that have experienced the biggest COVID-19 outbreaks.

The Southest posted the best comparable sales at 23.5 percent down and a 24.9 percent decline in comparable traffic. During the last week of March, the Southeast was the only market able to pull away with less than a 60 percent comparable sales drop. For the overall industry, March’s comparable sales traffic doesn’t fully capture the impact of the COVID-19 crisis on the entire month, noted Black Box. In the last two weeks of March, restaurant comparable sales were down 65 percent.


Has the restaurant industry hit bottom?

“Although it is hard to classify anything as good news right now, there is a positive in the sense that the decline in sales may have reached bottom based on early April data,” said Victor Fernandez, vice president of Insights and Knowledge for Black Box Intelligence. “As more restaurants focus their undivided attention on their off-premise offerings and guests adapt their consumption to this new environment, plus some of the government relief measures take effect, some small improvements may lie ahead.”

The growth in average check, according to Black Box, was 2.4 percent on a comparable basis. But during the last two weeks of the month, average check growth was virtually non-existent. Also, quick-serves saw a surge in check growth, due to larger family-sized orders.

Casual-dining fared the worst in average check growth with the lack of beverage orders and alcoholic drinks becoming part of the story. Municipalities across the country, however, have lessened restrictions on alcohol sales and allowed these for off-premises consumption. Virginia was late to the table, but recently allowed restaurants to sell mixed alcoholic drinks for takeout.

“While full-service restaurants were experiencing same-store declines of more than 70 percent year-over-year by the last week of the month, fast casual’s decline was about 50 percent and quick service lost only about 30 of its sales during the week (compared to last year),” noted the Black Box March report.


Economic outlook and the restaurant recovery ahead

Black Box suggests there are two main questions relevant to the near-term outlook. (1) When will the economy start to reopen? and (2) what will the recovery look like? “The answer to the first question is unknown,” said Joel Naroff, president of Naroff Economic Advisors and Black Box Intelligence economist. “As for the second, it is critical to understand that the programs put in place are stabilization plans not stimulus plans. You have to stop falling before you can start rising again. When the opening does occur, the early phase should be very strong. Given the massive number of business closures, their reopening will create a huge rise in activity. Also, households will have to restock, creating a temporary surge in consumer demand.”

The path to recovery is still uncertain, but it may look a lot like the one after the Great Recession. With unemployment sure to hit 20 percent and many businesses likely to fail during this health crisis, there will be a downward force on economic activity post-crisis. After an initial surge, the economy could take months to recover, suggests Naroff.

According to an early April survey conducted by Black Box Intelligence, 22 percent of restaurants laid off workers and another 67 percent had to put some employees on furlough. Data from Black Box comprises the tracking and analysis of more than 300 companies, over 2.8 million employees, over 50,000 restaurant units and $75 billion in annual sales.

Photo credit: Igor Rand

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