Advice for Buying a Restaurant and Selling a Restaurant

Restaurant Sales Outlook - Recap of First Quarter by the Restaurant Brokers

Posted by Robin Gagnon on Jun 8, 2016 12:40:17 PM

 

Robert Capture-7.jpgWagner, CPA has issued his first quarter resuts of Atlanta sales volume and the results show an impressive 3.5% increase in volume over the prior year.  His report shows that 71% of the 109 independent restaurants he surveyed posted positive results.  That's in line with what the restaurant brokers are seeing from our buyers and sellers for the same time period.  According to Wagner, this is the best performance for Atlanta market since the first quarter of 2015.   
Wagner's report further explains the trend saying, " Atlanta’s unemployment rate decreased to 5.2% in March 2016 from 5.7% in March 2015. The positive unemployment trend (and related solid employment growth), plus new city residents and abundant business visitors helped Atlanta overcome a bleak national sales trend to post good Q1 numbers."

 

Q1 Atlanta

Q1 National

2016 Comp Sales

3.5%

-0.4%

Black Box Intelligence, a restaurant sales and traffic-tracking company found that on the national level, sales for the same quarter were actually down .4%. This is despite the addition of a day in the first quarter this year as the Leap Year added February 29 to the calendar.  WIthout that extra day, sales could have been seriously off nationwide.  These results point to the relative strength of the Atlanta restaurant market.  Atlanta restaurant sales displayed an amazing resilience and a 3.9% swing against the national performance of negative .4%.  Since retail sales and restaurants sales are  weather dependent, some of this can be attributed to tougher climate in other parts of the nation.  

The National Restaurant Association performs its own analysis of the industry including their "Expectations Index" which surveys restaruants to see how many "expect" restaurant sales to improve over the prior time period.  The news on this front was positive as they reported that March led to Forty-six percent of restaurant operators reporting a same-store sales for March 2015 versus March 2016, and 38 percent reporting a sales decline. The news was not as positive on store traffice with only 26 percent of restaurant operators nationwide reporting an increase in customer traffic between March 2015 and March 2016, while 46 percent reported a traffic decline.

What do restaurant operators see in the future?  The National Restaurant Association Expectations Index was at 101.2 in March – down 0.2 percent from a level of 101.4 in February. Despite the modest decline, March represented the 41st consecutive month in which the Expectations Index stood above 100, which indicates restaurant operators remain generally optimistic about business conditions in the months ahead.

The report that "Thirty-eight percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 46 percent who reported similarly last month. Only 13 percent of restaurant operators expect their sales volume in six months to be lower. In contrast, restaurant operators remain comparatively pessimistic about the direction of the overall economy. Only 15 percent of restaurant operators said they expect economic conditions to improve in six months, while 22 percent expect conditions to worsen."

 

Robert Wagner, NetFinancials president said, “While Q1 2016 Atlanta sales comps are dramatic, they are particularly impressive when compared to the same-store sales decline at the national level. It is noteworthy that half of all restaurant brands tracked by Black Box Intelligence reported negative sales trends in Q1. In contrast 71% of Atlanta restaurants surveyed reported positive Q1 comp sales.”

Sources: 
The Sample:
The 109 non-franchise restaurants were drawn from the metro Atlanta market. Total survey sales volume was $75 million for Q1 2016. The survey includes restaurants in Atlanta’s fast- casual, casual and fine-dining segments opened at least 15 months.

Robert Wagner, CPA is president of NetFinancials, Inc. which provides a full range of tax and accounting services for restaurant companies found online at  www.netfinancials.com The NetFinancials quarterly Atlanta restaurant sales survey is provided as a public service to the restaurant industry. 

 

Topics: Buying a Restaurant