Restaurant Industry: A Diary of the COVID-19 Impact Sep 10

Heading back to School!

I hope you continue to be safe and avoid the virus. Data shows us the virus will find the soft spots in our country to flourish, and that the areas affected move around a lot. Currently, many mid-western states are seeing cases and hospitalizations going up, while they are going down in other areas.

A big, new wild card in the equation is students going back to school. While that may be of concern as it relates to potential increases in cases, the past month has introduced other events that have weathered well. For example, the NBA, MLB, PGA, MLS and other sports have resumed their seasons. While there have been some games postponed due to infections, my impression is that those leagues are doing better than some had expected. I hope the same will be true for the schools.

A coincidental event to the return to school each year is Labor Day. And, after a summer of slow but steady improvement in restaurant sales and traffic, the holiday created a bit of optimism with the volume of business that restaurants experienced. Before we get into the most recent holiday, let's review where we've been.

Covid Impact Recap

Mirus Index, which is a same-store comparison to the same day last year, is stuck around -20%. This means that, on average, a Mirus client location that is open today is generating about 80% of the sales it had last year. It is important to keep in mind that this is the average, and averages can be misleading in both directions. For example, more than half of our clients are experiencing sales that are better than -6%. But for others, the impact of Covid has been far more dramatic, with sales hovering around -50%, or worse in a few cases.

Screen Shot 2020-09-08 at 11.09.08 AM

The chart above illustrates same store sales from late February to early September by week. There were several holidays in this time line, and you might be able to identify some anomalies in the curve. From mid-June through July was a period of slower growth and some volatility. August and early September continued to experience some volatility, but overall the numbers continued to improve.

Labor Day Effect

The most recent week in the above chart includes the effect of Labor Day, and is the best weekly performance since early March. This is a good example of how numbers can mislead us. Same store sales were down -10%, which is wonderful, but it is the Labor Day effect from last year to this year that produced such a good result. Typically, Labor Day weekend is a great restaurant holiday, but the days following are usually depressed in their sales. Due to the way the calendar aligns, the holiday last year is included in the week starting on August 25, and it fell in the week starting September 1 this year. I can safely predict that the next week will return to something close to the -20% we have been observing recently.

Let's take a look at the holiday effect at the Day level of detail.

Screen Shot 2020-09-08 at 11.08.10 AM

The chart above contains the same data as the first chart, only the granularity has changed from Week to Day. First, let's celebrate the first positive value for Mirus Index since early March. At the week level, sales were down -10%, but that average hid the fact that sales on Labor Day were up 13% on a same store basis. It has been a long time coming, but we finally have a day that performed better this year than last.

Trend Interpretation

The median change in total sales for clients of Mirus is -5.7% as of this week. This means half of our clients continue to experience sales results worse than -5.7%, and the other half is doing better than that number. Progress towards Zero continues, but it appears we are still months away from a whole week of positive sales results.

Please stay safe!