Survey: Restaurant Operators Optimistic On 2012 Sales

Restaurant industry same-store sales remained flat in November, mainly because guest traffic tapered off from prior months, but operators remained bullish on sales outlooks for the next six months, according to the latest NRN-MillerPulse survey.

The December survey found that industrywide same-store sales rose 2.5 percent in November, in line with the 2.5-percent increase in October. However, sales did slow slightly on a two-year basis, rising 5.3 percent in November versus a 6.3-percent increase in October.

MillerPulse, an operator survey exclusive to Nation's Restaurant News, polled around 70 restaurant operators in December regarding November sales, profit trends, performance and outlooks. Respondents cover all regions of the country and represent the quick-service, casual-dining, fine-dining and fast-casual segments. Those surveyed in December represented restaurants that booked about 17 percent of industry sales.

Same-store sales for quick-service restaurants, which include both fast-food and fast-casual brands, increased 3.4 percent in November, compared with 3.6 percent in October, and sales for full-service restaurants, which include both fine-dining and casual-dining brands, remained consistent with a 1.6-percent increase in November, compared with a 1.4-percent uptick in the prior month.

The modest same-store sales numbers are a reflection of a dip in guest traffic, which increased just 0.1 percent during the Thanksgiving month, compared with a 1.4-percent increase in October. The biggest concern was a traffic decline in the full-service category, said Larry Miller, restaurant securities analyst at RBC Capital Markets in Atlanta and creator of the monthly MillerPulse surveys and research.

"This is the first negative traffic figure we've seen in full-service in over a year," Miller said. "That can be concerning going into next year."

Guest traffic for full-service restaurants fell 1.1 percent in November compared with a slight increase in October. And while quick-service traffic increased 0.9 percent in November, it was a significantly less substantial gain than the nearly 3.0 percent increase reported in October.

With the holiday shopping season, Miller said he would've expected traffic to be better, but the numbers show that consumers remain careful how and where they dine out.

"People came out for discounts in retail and they looked for restaurant value as well," he said. "This is why we are seeing a widening differential between quick service and full service."

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Operators see happy holidays ahead

A less exciting month than the record-setting October didn't dampen operators' optimism, particularly for the holiday season, the survey found.

Across all segments, a net 45 percent of operators expect December sales to be stronger than November. The score is based upon the 63 percent of operators who thought that sales would be better versus the 17 percent who said they would be worse.

Furthermore, of all the operators surveyed in November, 62 percent said that holiday sales would be better than last year and only 10 percent expected them to worsen.

Operators' confidence continues to be strong in the long-term as same-store sales expectations for the next six months are positive across all sectors for the first time since April. The fine-dining segment showed the biggest swing in operator confidence, going from a net 38 percent that believed sales would worsen over the next six months in October to a net 25 percent that believed sales would improve over the next six months in November.

Miller, on the other hand, is slightly more skeptical.

"I'm not quite as optimistic as they are," he said. "I'm not sure that the consumer is as strong as they think it is."

Commodity costs also continue to present a major problem going into 2012, as operators are expecting inflation of 2.4 percent in the coming year. Commodity costs was the biggest concern for both full-service and quick-service operators in November, driving a net 20 percent of operators industrywide who believe margins will worsen over the next six months, reversing a three month trend of optimistic outlook on margins.

"Things weren't as bad as they [operators] thought in the summer," Miller said. "But as we look into the first half of 2012, things look pretty bad from a commodities perspective."

That challenge aside, and given the current economic environment, Miller was generally positive about November's results.

"In the end, sales have held in there and two-year trends are pretty good," he said. "With expectations of a strong holiday season, overall things are probably a little better than expected."

EARLIER: Survey: Operators positive on sales, margin expectations
• Restaurant operators sour on same-store sales
• NRN-MillerPulse surveys show traffic gains, low guest confidence
• Survey: Restaurant traffic up, average check down
• NRN teams with MillerPulse for new benchmark research

Contact Charlie Duerr at charles.duerr@penton.com.