by Kevin Stockslager, Senior Vice President, Wray Executive Search
A tough summer for restaurant industry sales continued this month, as same store sales dropped 0.7% during the month of August, following a decline of 1.0% in July, according to the Black Box Intelligence Index by TDn2K. The restaurant industry has not experienced two consecutive months of negative same store sales since early 2018, during a period of terrible winter weather across much of the country. On a positive note, even with the recent same store sales declines, August’s sales were actually up 1.2% compared to August 2017. Of course, traffic continues to be a concern. Traffic declined 4.0% in July and 3.9% in August, restaurants have continued to rely on increased average guest checks to try and keep pace with sales, but are wary of the long term stability of that model.
Restaurant operators and leaders continued to highlight concerns among the labor market, which is still strong, but the US-China trade battle has many worried of an economic slowdown. In addition to declining sales and looming economic concerns, restaurant leaders discussed the difficulty keeping restaurants fully staffed and minimizing turnover. Restaurant companies have worked to implement improved training and development programs, as well as increase pay to retain talented team members. One example is Chipotle, which debuted a new crew member bonus program earlier this summer.
Big movement on the meatless and meat alternative front. While the percentage of Americans that identify as vegetarians has held steady at around 5% of the population for years, the call for meatless alternatives has grown over recent years and the restaurant chains have taken notice. After a successful test earlier this summer, Burger King announced the nationwide rollout of the Impossible Burger at all 7,200+ US locations in August. Impossible Foods has also announced partnerships with Qdoba and other restaurant companies, while Beyond Meat has begun selling their products at Subway, Del Taco, and KFC. In July, Dunkin Brands announced a partnership with Beyond Meat to introduce meatless sausage sandwiches in NYC test locations, with plans for a nationwide rollout in the future. Beyond Meat’s stock has skyrocketed since going public in May and Impossible Burger recently garnered $300 million in investor funding to continue growth. However, not all large chains have hopped on the meatless movement. While McDonald’s has tested out sales of a vegan burger in Germany, the company has not announced plans for US rollout, instead holding out to see if US consumer demands stay true and are not just a short-term trend or fad. Arby’s, perhaps best known for their slogan “we have the meats,” had some fun recently, introducing vegetables made out of meat, “megetables.” Of course, it was just another clever marketing campaign from the team at Arby’s, but I wouldn’t plan on them introducing any meatless alternatives in the future.
All the best,
Kevin Stockslager, Ph.D., Senior Vice President
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