Black Box Intelligence’s restaurant insight report for July 2022 revealed some interesting numbers, including the areas with the best and worst performance, how the economic pressures are affecting restaurants, and the need to “double down” on the experience. Let’s explore the latest trends and insights.
YoY same-store sales experienced the fifth consecutive month of negative growth. July’s sales showed a 1.3% slowdown compared with June. Even more concerning, it was the weakest growth since February 2021.
Guest count growth rates and same-store traffic also experienced negative YoY growth, with a -5.1% decline in July, a continued slide from June. This was also the softest traffic growth since February 2021.
According to Black Box, casual and fine dining showed the greatest softening in terms of sales growth, while family dining and fast casual performed better. History has demonstrated that consumers usually face economic pressures by trading down to lower price points, such as quick service, or heading out to family dining for the full-service experience.
The Restaurant Experience
As inflation continues, restaurant guests increasingly measure the amount of money they are spending as it relates to the experience. Guests gave limited and full-service restaurants the highest star rating when they mentioned fresh and delicious food, friendly service, and a clean environment. Mentions of great price and affordable also translated to the highest star ratings. These ratings decreased with remarks of wait times and small portions.
The Labor Challenges
Black Box noted that, despite some easing in turnover rates, they remain significantly higher than pre-pandemic levels. To see how restaurants responded to this trend, they took a poll and asked them what they were doing to reduce the turnover rate and improve employee retention.
Over 90% said they increased the amount and frequency of pay. In addition to payment adjustments, over 30% said they offer more time off or provide greater flexibility in work schedules. Almost 50% said that improving restaurant manager retention involved improving professional development and career opportunities.
Performance by Areas
New England topped the best performing areas in the family dining segment with a winning cuisine of pizza. By comparison, fine-dining steak houses in California saw the worst performance.
Blessings and Challenges
Despite the slowdown, the demand for the restaurant experience remains relatively stable and exceeds many operators’ abilities due to the current labor crunch. Many are establishing waiting lists despite open tables and reducing operational hours because of BOH and FOH staffing issues.
In addition, the following challenges remain, according to the NPR:
- Wholesale food costs are up 17% from the previous year.
- Labor costs rose 15%.
- Rent, for some, is up 15%.
- Restaurants see increasing prices for cooking fuel, gas, paper, and plastic goods.
Larger chains with greater buying power don’t feel the effects of a challenging supply chain quite as much as independent restaurants. The National Restaurant Association reports that about 90,000 restaurants have closed temporarily or permanently due to the pandemic and its aftermath. Some of the ones that remain are running on extremely thin margins, often as little as 1% of sales.
Restaurants can increase this margin by partnering with supply chain specialists like Consolidated Concepts. Group purchasing gives you the full buying power that compares to multi-unit restaurants—leveraging over $10 billion in annual purchasing volume. You can also increase profit margins by utilizing F&B Insights, a platform that monetizes sales data and creates new revenue streams.
At EMERGING, we have helped restaurants through countless challenging environments in our decades of service. It’s an industry we’re proud to be a part of and one in which we continue to bring needed and cutting-edge resources to the table.
Is August a slow month for restaurants?
Depending on your location and type of restaurant, August can be a slow month. If you’re fortunate to find yourself in a tourist hot spot, you can find an end-of-the-summer boom as people head out to celebrate the end of the season. If like many of us, you find yourself in a town with many of your loyal customers heading away from your establishment, August can be slightly challenging.
Consider ways to bring your guests into your restaurant to celebrate the summer. This may include throwing a themed event, offering signature drinks and dishes that define the season, and sending unique specials to your frequent customers.
Is the restaurant industry growing or declining?
According to a report in Statista, the restaurant industry has seen healthy growth in the last few decades, despite the challenges brought on by the pandemic. While this is a challenging time for some, like the pandemic and the Great Recession, this too shall pass.