August Brings Some Heat Into Restaurants’ Kitchens

jobgrowthFor the restaurant industry, August 2014 was the best sales month in more than two-and-a-half years — more evidence that the economic sector is recovering.

In a recent online post, “Restaurant sales rose, traffic slid in August,” Nation’s Restaurant News (NRN) writes, “August was the best month for the restaurant industry in terms of sales growth since February 2012, and the industry is poised to achieve two consecutive quarters of positive growth for the first time since the second half of 2012, according to the latest Restaurant Industry Snapshot from TDn2K’s Black Box Intelligence and People Report.”

Given the strong presence Sintel Systems has in the retail, restaurant and service industries’ point of sale marketplace, we share these service sector growth trends with our customers and franchise hopefuls looking for key insights and opportunities in order to help them make the best decisions from the very beginning.

Here are the highlights of the post:

• Same-store sales grew 2.1 percent during the month. That’s a 1.6-percent improvement compared with the growth rate reported for July.

• Victor Fernandez, director of insights and knowledge for TDn2K, parent company of Black Box Intelligence and People Report, tells NRN, “These latest results are very encouraging for the industry and beat our expectations for the month.”

• Again, Fernandez: “To put this into perspective, the last time year-over-year same-store sales jumped by [more than] 1.0 percent from one month to the next was from February to March of this year, as the industry climbed its way up from the terrible winter sales results.”

• NRN points out that the very positive results from August were not simply a matter of the month having a soft comparison from August of last year, and writes, “From a two-year basis comparison, the industry’s same-store sales grew by 2.3 percent during the month.”

• “Another very encouraging indicator behind the strength of the industry’s performance in August is that positive same-store sales growth was pervasive throughout the entire country and not just reported in some regions,” Fernandez told NRN. “Each of the 11 regions we track posted positive same-store sales growth in August for the first time in over two years.”

• Florida topped out as the best performing region during August, with same-store sales growth of 3.6 percent. Meanwhile, New York-New Jersey was the worst performing region, with a 0.2-percent growth rate.

• “At the individual market level we found that an overwhelming 154 DMAs out of the 188 individual markets tracked by Black Box Intelligence reported positive same-store sales growth during the month,” Fernandez said. “This was simply the best month for restaurants in a very long time.”

• Along with these specific results, the U.S. economy showed signs of strength in August as well. NRN writes, “The University of Michigan Consumer Sentiment Index hit a seven-year high in August, fueled by improvements in the labor market, a surging stock market, robust momentum in manufacturing growth and strong housing sales.”

• “A key indicator for the restaurant industry is disposable personal income. The 1.6-percent annual growth we saw in July and the 2.0-percent growth we saw in August enabled the robust same-store sales growth we’ve been experiencing,” Fernandez told NRN. “Another key factor is average gas prices, which in August dipped under the $3.50-per-gallon mark which Black Box Intelligence has established in the past is where they begin to negatively affect restaurant sales.”

• NRN notes that the People Report’s latest numbers also show other restaurant employment trends, including:

– A significant increase in new jobs was created by the restaurant industry during the period. Restaurant jobs have grown 4.4 percent this year compared with the same period last year.

– Restaurant chains continue to expand, and hiring is on the rise.

– However, the industry also continues to face growing challenges from the staffing perspective as both restaurant manager and hourly employee turnover rates persist on the upward trend of the last few years. According to the People Report Workforce Index, recruiting difficulties, a growing number of vacancies and rising turnover are expected to continue throughout the rest of the year.

• Same-store traffic fell 0.5 percent during August, a 1.1-percent increase compared with the traffic growth reported for July. “Even though this represents the ninth consecutive month in which the industry has reported declining year-over-year guest counts (and the industry has yet to post a quarter of positive same-store traffic growth since the recession), August produced the best traffic results since November of last year,” writes NRN. “This improvement notwithstanding, the true challenge for the industry continues to be these declining guest counts, as evidenced by the fact that on a two-year basis, same-store traffic declined by 2.1 percent during August 2014 when compared with the number of guests reported for August 2012.”

Read the full post here.

For more insights into the restaurant industry’s performance and trends, check out our related posts, Boom Times for the Restaurant Sector? Recruiting Franchise Announces Big Growth Plans, Now’s a Good Time for Good Timing, and Growth Investors Likely To Get In Line For Shake Shack IPO.

Sintel is the only full-service, direct-to-user point of sale provider — no resellers, no middleman. From software development to franchise incubator to ongoing support, part of Sintel’s commitment to our customers and industry is to share information on how to achieve success.

Before you make your franchise move, consider calling Sintel Systems for a free phone consultation to help weigh and understand your options. We serve as a franchise incubator for clients across the retail, restaurant and service industries, forming lasting partnerships with our clients that you simply can’t get from a reseller.

If you are interested in learning more about Sintel’s point of sale (POS) systems and how our knowledge and support can impact your future success, call us for a complimentary phone consultation.

Sintel Systems is the only direct to end user full-service provider of tailored Point of Sale systems across retail, restaurant and service industries, including frozen yogurt shopspizzeriassushi restaurantscafés and retail stores.

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