December continues to look like an important month for the restaurant industry. After years of poor or lackluster results overall, the first half of December has delivered positive same store sales and traffic, according to the Mirus Index.
Much has been written over the past two years about the dismal pattern of same store sales and traffic for restaurants. Traffic has been negative throughout this period, and sales have rarely been positive, and then only when restaurants increase prices.
Analyzing Restaurant Profits
Restaurants are changing the way they analyze profits and performance. New techniques for examining data are being used. New metrics are being calculated. And perhaps the most important change is the amount of data being examined every day, and throughout the day in some cases.
Historically, restaurants reported highly summarized data each day to manage the business. Sales for Lunch or Dinner, or sales mix for a day or week, or labor dollars as a percent of sales for the day are typical examples. Summarized data can mask operational issues, and it limits the depth of performance analysis you can conduct. For example, a daily labor metric could hide the fact that there were hours where too many employees were on the clock while at different times of the day staffing was insufficient to service customer demand.
Topics: Restaurant Profit
Why is it difficult to find and organize reporting data?
All you want is a factual answer to an important question you have about the business. It may take hours or days of labor to get all of the data put together properly. But you need to make a critical decision and you need the data to figure out the best course of action. To make matters worse, if you need to the data refreshed again in six weeks, it will take just as long to compile the data.
Mirus Index Shows Decline
2017 has been tough if you are in the restaurant biz. With occasional signs of optimism slipping in every once in a while, the year has been a bust for most chains. Many of the companies who produce the benchmark numbers for the industry continue to mistakenly look at same-store-sales, and failing to draw justified alarm to the reduction in customer traffic.
I have been beating this drum for over a year now, and I am happy to say I do see signs that the traffic problem is getting mentioned more often of late. Here is the latest story from the New York Times on a possible cause of the traffic malase - overdevelopment (https://www.nytimes.com/2017/10/31/business/too-many-restaurants-wall-street.html?smid=tw-share).
On a two-year basis through September, the Mirus Index shows a decline of -8.0% across all segments. The bad news is that October will be worse when all the numbers are collected.
The official numbers for July are now out and it was a bad month for restaurants sales, down by -4.7% according to TD2NK. I thought it would be good to take a mid-month check on the Mirus Index to see if August could be the month to turn things around. Based on the first 14 days of the month, the sales slump continues in August.
Same Store Sales in Mirus Index were positive in both Q1 and Q2 of 2017, and you can see the trail end of that in the chart above. The positive gains were declining in June, and July 4th was a great weekend, but by the middle of July the month to date numbers were negative and they haven't budged much.
All of this is focused on sales, but what about traffic? Q3 will be the seventh quarter in a row of negative customer traffic into restaurants. TD2NK measures that traffic fell -8.7% from July 2015 to July 2017. The Mirus Index has traffic down -2.7% at the mid-way point of Q3 2017. You can manipulate same store sales, but you can't manipulate customer traffic.
We will keep an eye on things, and keep you informed. If you would like to learn more about how you can get the Mirus Index every day, click on the button below.
Restaurant sales and customer traffic have been in decline for months, and July didn't help. While the results were not the worst in recent history, July extends several streaks that started at the start of 2016. Same store sales for July fell (1.2%) on (2.6%) less traffic. July was the first month this year that recorded negative growth in both numbers.
For the past year, reports have been consistently detailing the decline in restaurant same store sales. Mirus reporting clients, as a group, have not suffered this fate.
Mirus Index is a same store sales performance benchmark of all the restaurant companies who use Mirus reporting solutions. For the past eight years we have routinely compared the Mirus Index against the more popular indices published by companies like Black Box Intelligence, MillerPulse, Restaurant Research, and others.
Topics: Restaurant Profit
Menu changes occur all the time in restaurants. Sometimes it is a price change; sometimes it is a limited time offer. There are lots of reasons for changing your menu. Think of a menu change as an avenue to stimulating your customers. By making the change, you are hoping to achieve a particular outcome; for example, selling more of a menu item or making more money selling the menu items you already sell.
Topics: Restaurant Profit
Measuring success or failure of a system that improves decision making is challenging in many respects. But, the Same Store Sales (SSS) metric can be useful, especially when applied to a long period of time, and across thousands of restaurants. SSS is caluclated as a percentage change from last year to this year, and only uses locations that are open for both years.