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Industry Outlook For 2019 Second Half
by Kevin Stockslager, Vice President at Wray Executive Search
After a strong second half of 2018 and solid start to 2019, as same store sales increased 2.1% in January, the restaurant industry stumbled a bit in recent months. Same store sales declined in February (-0.6%) and April (-0,4%), combined with more months of declining traffic. However, industry same store sales grew 1.1% in May, leading to some optimism heading into the summer months. Another month of declining traffic (down 2.1% in May) continues to concern operators, as relying on increasing guest check to drive same store sales does not look to be sustainable.
Restaurant operations continue to battle many of the same issues that concerned the industry much of 2018. In a recent survey, operators cited labor issues as the most critical concerns. In particular, recruiting & retaining quality employees and keeping restaurants fully staffed were mentioned. Additionally, continued declines in traffic, increases in expenses & costs, and implementing relevant technology were cited as top concerns amongst operators.
The merger & acquisition activity has slowed down a bit in recent months. However, some notable activity includes the recent sale of Whataburger, Wellspring acquiring Lucky Strike Entertainment, and the MTY/Papa Murphy’s merger. There could be increased action in coming months, as Church’s Chicken is looking for a buyer, investors have offered to buy Red Robin, Kona Grill is for sale, activists are pushing for a sale of J. Alexander’s, and Jack’s Family Restaurants is exploring a sale process, to name a few potential upcoming sales.
Overall, positive outlook for the rest of 2019, as consumer confidence remains high, job growth remains strong, and the economy projects to continue growth. With the summer months approaching, restaurant leaders and operators look forward to accelerated sales.
All the best,
Kevin Stockslager, Senior Vice President
(845) 863-5562
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