Restaurant Industry Sales Continue to Surge
By Kevin Stockslager, Vice President, Wray Executive Search
Restaurant industry sales continued to grow in September, rounding out a very strong Q3 for 2018. Same store sales were up 1.2% for the month, marking the fourth consecutive month of growth for the industry and contributing to a 1.2% sales growth rate for Q3 overall. This also marks the first time that all three months in a quarter have posted positive same store sales since 2015, an exciting bit of news for the industry. While the industry has recorded positive growth in six out of nine months so far in 2018, traffic continues to decline, again falling 1.2% for Q3 2018. Increased guest checks have contributed significantly to the restaurant top line sales and while traffic has improved slightly since earlier this year, the trend of decreasing guest count looks to continue into the near future.
On the labor front, national unemployment rates continue to drop, currently at 3.7%. Restaurant operators have focused heavily on the recruiting and retaining of top-notch employees now more so than ever. In fact, in a recent earnings call, Darden CEO Gene Lee cited “the war for talent” as the biggest challenge facing the restaurant industry today. He went on to say that “brands that can hire, train, and retain front-line employees to bring their brands to life are going to win, and the dynamics inside the industry ae changing dramatically.” With the number of employees in the restaurant industry continuing to increase (2% growth in the number of restaurant industry employees compared to the same month in 2017), decreasing turnover will continue to be a primary objective for restaurant operators.
Mergers and acquisitions within the restaurant industry show no signs of slowing down, with several major announcements over the past few months. Most notably, Inspire Brands added Sonic Corp. to their list of brands for $2.3 billion. The addition to their current portfolio of Arby’s, Buffalo Wild Wings, and Rusty Taco makes Inspire one of the country’s largest operators within the restaurant and foodservice industry. Additionally, Del Frisco’s sold Sullivan Steakhouse to Romano’s Macaroni Grill, La Boulangerie acquired Loving Cup, Cava purchased Zoe’s Kitchen, Focus Brands bought Jamba Juice for $200 million, Carlisle sold LYFE Kitchen, and a rumored purchase of Papa John’s was recently reported. Several other rumored mergers and acquisitions indicate that the market is unlikely to cool off towards the end of 2018.
Overall, another positive quarter for the industry as same store sales continued to grow for the fourth straight month. Several major brands added to their executive leadership and are poised for a positive end to 2018 and great start to the new year.
Kevin Stockslager | Vice President
If you enjoyed this article, please subscribe to Wray Executive Search Executive Connection. Our monthly publication includes industry news, executive movements and thought-provoking articles.