First Quarter Review for the 2013 Restaurant Industry

In comparison to a year ago at this time, sales in the restaurant sector during the months of January and February weren’t quite as good. There’s been a variety of factors influencing the downturn which we will discuss below. That being said, March actually saw most restaurants moving back into positive territory, although consumers’ willingness to spend continued to fall (as indexed by Consumer Edge Research.)

Given the slow start to the first quarter, the opening of the second feels somewhat uncertain, though opportunities to solidify market share and attract new consumers can still be found.

Challenges to First Quarter Restaurant Sales

There have been a number of factors which have influenced the sales for the restaurant industry in the first quarter of 2013. Part of it has to do with the impact of payroll taxes and delays in tax refunds, which certainly hurt consumer spending as compared to a year ago. The bad weather that many areas of the nation have been experiencing over the last couple of months has also played a role in first quarter results.

March seems to have shown a recovery to some of these challenges, but the economic environment continues to be somewhat fragile.  In addition, Easter fell in March this year (as opposed to April last year), which alters the numbers somewhat.

A Look at First Quarter Statistics for the Restaurant Industry

Interestingly enough, during the month of March restaurant same-store sales rose by .5 percent, yet same-store traffic declined by 2.0 percent. In comparison to February, this is positive news (February same-store sales declined by 5.0 percent, and same-store traffic declined by 4.2 percent). In addition, 107 out of 171 DMAs reported positive results, compared to only one such report in February.

Overall for the first quarter of 2013, same-store sales fell by 1.3 percent and same-store traffic declined by 3.7 percent. Consumer Edge Research puts out a report called ‘Restaurant Willingness to Spend Index’, which shows that consumers’ willingness to spend their money came in at 83 for January, 82 for February, and 81 for March.

Turnover Results and Niche Market Opportunities

Analysis of turnover rates for the month of March shows that turnover in management positions is decreasing while turnover in hourly positions is increasing. This makes sense given that everyone is looking for ways to make more money – those who aren’t getting paid enough are going to look elsewhere and those that have good jobs are going to want to keep them. Overall job growth for the first quarter remains right around 0.9 percent.

First quarter sales have also seen an increase in adult-only parties, with many families saying that it is simply too expensive to eat out with the kids. This trend represents an opportunity to recapture the family audience through strategic positioning and brand messages.

All in all the first quarter results are a little disappointing, but many businesses are looking forward into the rest of the year with optimism as our economy continues to improve and people are better able to relax the need to be hyper-vigilant over their budgets and expenditures.