First quarter restaurants sales in Atlanta turned in a negative trend of -.7%, only slightly better than the national average for one of the few times that the restaurant brokers can remember in tracking history. That's the findings from Robert Wagner, CPA and president of NetFinancials who monitors and reports the market's sales with his quarterly report. .
Wagner measured 118 independent Atlanta restaurants and fully 59% reported negative comparable sales trends. That's before we even get to quarter two of 2017 which we anticipate to hold further bad news for the market. The closure of I-85 based on the alleged actions of Basil Eleby and two other people -- all believed by investigators to be homeless, when they torched the bridge led to businesses entirely cut off from traffic, large numbers of never before telecommuting professionals and traffic snarls that made getting to and from your home a main priority - not stopping off for food or drink. The actions brought much of Atlanta to its knees and the impact on restaurant sales in quarter two with the I-85 closure from March 30 to May 12, (most of second quarter), has yet to be calculated.
While Atlanta licked it wounds with down trending sales January through March of 2017, things were worse on the national level. TDn2K’s Black Box Intelligence, a restaurant sales and traffic- tracking company, reported national restaurant Q1 2017 revenues declined by 1.6%. This was the fifth consecutive quarter of negative sales results nationally. Restaurant traffic declined 3.6% nationally in Q1. TDn2K has a massive pulse on restaurant sales. They publish the The Restaurant Industry Snapshot based on weekly sales from over 26,000 restaurant units and 145 brands, representing $66 billion dollars in annual revenue.
What's Impacting Restaurant Sales for first quarter? There are several schools of thought but here's what these restaurant brokers think.
1) Competition. The fast casual segment in particular has been ever expanding on at least a three to four year cycle. Now it's time for some players to shake out and we're seeing that occur across the country at record levels. It's not a new trend to see concepts grow and contract. We have seen ebbs and flows for wholescale parts of the industry over time whether it was a specific type of cuisine (pizza comes to mind) or type of service (full service used to be a thing - before the recession of 2008). Over time, the strongest will emerge, survive and thrive.
2) Shopping Trends. A report by a national real estate firm indicated that 9000 Mall locations closed in the first quarter of 2017. That's not a typo --- that's four digit closures of retail stores, 9,000 of them in three months. More online shopping means less trips to the mall. If customers aren't out shopping on Saturdays and Sundays, does that mean they also aren't eating two or three meals out that day? Is it easier to order up what you want and eat a sandwich at home? We think so and ultimately this may drive more business back to restaurants as we are also seeing amazing growth among delivery services.
3) Easter Shift. Back in my retail planning days, a shift in Easter seriously moved dollars around for clothing and footware purchases. 2016 numbers for first quarter included Easter as it fell on March 27th last year, a relatively early Easter. It was a massive shift in 2017 of two weeks, pushed out to April 16. At the national level, some pickup may show in the second quarter numbers when this shift is realized though Atlanta will be feeling the effects of I-85 so expect no improvement there. Customer buying habits are consistent and holiday sales affect the numbers, particularly independent concepts like those cited in the report from Wagner on Atlanta sales. His group includes only independent operators, not franchises. .
What does the future hold for restaurant sales and what's an operator to do? It's the same conclusion we always reach. The restaurant business is a tough master and those within it face challenges each day. Never stop improving. You must be laser focused on sales and attuned to the customer's patterns. While tough, the restaurant business is a robust and amazing part of the nation's economy and Americans love to eat away from home. The smart operators will figure it out. This is one quarter, not a lifetime.