In recent months, it’s been debatable whether or not the restaurant industry’s upward climb was a short-term burst or something with true staying power. TDn2K’s latest industry snapshot suggests the latter might be true, although there remain significant roadblocks. In past reports, restaurants have played a balancing game. Declining traffic in the face of increased competition. But higher checks. Would that tightrope eventually snap? November sales suggest another buzzing, incremental change is pushing the needle: off-premises. A rise in to-go and delivery is upping the overall performance for chains, and has been for months. And given the holiday rush, especially as it relates to catering business, the restaurant industry’s growth in this sector isn’t likely to slide anytime soon. Another thing off-premises programs and improved digital tools have accomplished is turning restaurants into accessible options for the seasonal boom.

“Online sentiment analysis reveals these brands deliver on superior service, ambiance and consistency in execution to keep their dine-in customers,” TDn2K said.

Same-store sales tracked 1 percent in November across the industry, marking six consecutive months of positive growth. Excluding a small dip in May, every month since March has posted positive comps growth. This represents a period of improvement not seen for restaurants in more than three years.

“Although we have been excited to report on positive sales growth for most of the year, there was always the caveat of this only being a recovery from a short-term perspective,” said Victor Fernandez, vice president of insights and knowledge for TDn2K, in a statement. “The industry’s sales were better than a year ago, but in reality, we were still negative compared with where we were two years prior. However, there is some encouraging news in the fact that, over the last two years, two months have posted same-store sales growth on a two-year basis. Those two months were October and November of this year. What is perhaps more reassuring is that those two months were among the three strongest based on sales growth last year, meaning it’s not a matter of the industry jumping over some easy hurdles. We are starting to see some longer-term recovery in restaurant sales.”

Even with the improved off-premises and higher checks, the traffic problem persists. It remains a sobering counterargument, TDn2K points out. Same-store traffic declined 1.9 percent in November, which represented a slight 0.3 percentage point improvement over October’s growth rate. The issue here hasn’t changed. Even with an increase in sales, the chain sector has never faced a more competitive set. Outside pressure from independents, grocers, C-stores, and other to-go outlets continue to spread customer frequency. Not to mention the simple rise of fast-casual outlets and the ghost-nature of third-party delivery.

“Though chain restaurants as a whole are far from being able to solve their main problem of losing dining occasions to competitors outside the sector,” Fernandez added, “Black Box Intelligence data shows that those restaurant brands in the top quartile of performance have continuously achieved positive same-store traffic growth. Additionally, TDn2K in it’s White Box Social Intelligence research has revealed that it is factors such as superior service, an ambiance that meets expectations and consistency in execution throughout the system on all attributes of the restaurant experience that are enabling those brands to achieve traffic success.”

In other terms, the best-in-class brands are using their scale and leverage to rise to the top of the chain pyramid. The real slowdown is taking place in the below tiers.

TDn2K’s data shows strong same-store sales from a top-line perspective, but a shift in consumer behavior when it comes to where those meals are actually being consumed. Dine-in comps, for instance, have been negative in recent months—it’s the to-go and off-premises sales that have lifted restaurant chains into positive growth.

For 2018 year-to-date, to-go sales are approaching 9 percent, year-over-year. To compare: to-go sales in comparable stores lifted less than 4 percent in each of the past two years.

As mentioned previously, this growth is leading consumers to restaurants for their holiday needs. Same-store sales growth for to-go, catering, and banquets all posted double-digit growth during the week of Thanksgiving compared to the same holiday period a year ago.

By market, Black Box tracked widespread growth in November. Of the 196 individual designated market areas it tracks, 143 reported positive sales growth (73 percent). Between 73–76 percent of markets have achieved positive results for the last five months.

The Western Region topped the performers with sales of 3.25 percent and traffic of negative 0.45 percent. New England was the weakest: sales declines of 0.84 percent and traffic of negative 4.12 percent.

Labor is still an issue

The restaurant industry saw another increase in turnover rates for hourly employees as well as all levels of management. Chain restaurant jobs grew to 1.8 percent in October, up from 1.7 percent in September, which isn’t making this problem any easier. “Additionally, customers’ expectations around service are proving to be a differentiator between those brands performing at the top and those that are struggling,” TDn2K said. “Meeting these expectations and delivering a consistent experience is more important than ever to maintain sales and traffic counts, and much more difficult to accomplish while understaffed. In an increasingly tight labor market, restaurants need to look for ways to attract and retain engaged employees at all levels. This points to a need for a focus on compensation, career and professional development opportunities and a work/life balance.”

Essentially, the restaurants with the best service and execution are winning. But accomplishing that takes employees, and finding employees and keeping them is harder than it’s ever been. It’s an equation that continues to challenge operators.

“In this increasingly tight labor market in which the war for talent is a roadblock for successful restaurant operations, companies need to answer the question: what will attract employees to work for us and become engaged contributors,” TDn2K said.