Foodservice Equipment Reports

Restaurant Sales Weakened In January, Preliminary Data Suggests

Retail foodservice sales fell a seasonally adjusted 0.6% from December, according to the advance report of retail sales from U.S. Census Bureau, released February 12. The decline compares with a revised 1.3% seasonally adjusted gain in December, compared to November. Even with the weak January, advance retail sales data show foodservice sales up 6.1% for the past 12 months.

While the retail foodservice sales numbers were down, so-called “core” retail sales—excluding foodservice, autos, gasoline and building materials—rose 0.6%, a number that cheered up most analysts, worried about the declines in the equities markets and what they may signal for the economy in the U.S.

The January decline was similar to a same-store sales trend number from by TDn2K’s Black Box Intelligence for 23,000 chain restaurants in January, as reported a day earlier in Nation’s Restaurant News.

The research firm said same-store sales fell 0.8% during the month versus January the year prior, the biggest decline since February 2014 and only the second time same-store sales had declined in the past 15 months. Traffic in the tracked stores also was soft, falling 3.2%.

The weak sales trends come on the heels of a dramatic decline in the National Restaurant Association’s Restaurant Performance Index for December, which also indicated negative same-store sales and traffic trends. (See story here from FN 02-03-16).

Still, analysts at TDn2K, as cited in NRN, chalked up the sales drop in January to external factors, more than fundamentals. The primary culprit was the big snow storm in the heavily populated Mid-Atlantic states the third week of January. The firm said same-store sales dropped as much as 40% in the region during the week of the record-setting snowstorm, though they said sales were also softer in areas, such as California, unaffected by inclement weather. Sales this January were also competing against a very strong January 2015 performance, the firm added.

In fact, the research firm’s economist said while there is much uncertainty in the economy right now, the fundamental drivers of foodservice sales, jobs growth and the continuing decline of gasoline prices, remain strong. While there is risk the decline in the stock market will negatively impact consumer confidence (see related story this issue), and that consumers may well get a bit more cautious in their spending, he expects any slowdown to be short-lived.

And perhaps he is right. Chain Store Guide’s Consumer Spending Report for January reports a 3.9 point gain in its CSG Restaurant Spending Index. The company said the index is trending above its 12-month moving average and the January reading was the highest since June 2015.

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