Fourth-Quarter Sales Growth Doesn't Dismiss Potential Challenges in 2016
The good news is 2015 was a much better year than 2014 for the restaurant industry; the bad news is same-store sales growth continued to decelerate during quarter four. Same-store sales growth for all of 2015 was 1.6 percent, a 1 percent jump from the growth rate reported for 2014, and a 2.3 percent improvement compared with 2013’s results. However, the industry seems to have crawled to the finish line this year with a small same-store sales growth of 0.4 percent during quarter four, a 1.2 percent drop from the quarter three results, and the lowest sales growth rate reported for any quarter since quarter three of 2014. This insight comes from data reported by TDn2K’s Black Box Intelligence through The Restaurant Industry Snapshot, based on weekly sales from over 23,000 restaurant units, 120-plus brands, representing $57 billion dollars in annual revenue.
“Although the industry has now experienced six consecutive quarters of positive same-store sales growth, it is important to mention that every quarter since Q1, we have seen lower sales growth rates than during the preceding quarter,” says Victor Fernandez, executive director of insights and knowledge for TDn2K. “What is most concerning when analyzing this persistent slowdown in sales, is that the 1.2 percent drop in year-over-year same-store sales growth experienced during Q4 compared with the previous quarter is the largest decline experienced by the industry in over two years.”
“The national economy continued to expand during the fourth quarter of 2015, with robust job gains, more spending on big-ticket items such as vehicles and houses and rebounding electronic purchases. However, there are holes in the expansion related to the collapse of energy prices and the jump in the value of the dollar. This has led to regional weakness in energy-dependent areas and a softening in the manufacturing sector,” adds Joel Naroff, president of Naroff Economic Advisors and TDn2K’s retained economist.