Restaurant Sales Improve, Far From Last Year's Peaks
Data through the week ending February 20, 2022
Restaurant sales growth jumped significantly during the week, on the back of Valentine's Day was included in the week ending February 20, 2022, but not in the comparable week in 2020. Despite the favorable boost due to Valentine's Day shifting a week, traffic growth remained negative. Furthermore, traffic growth improved less than half the improvement seen in sales growth. During the first three weeks of the month, sales improve over January's sales growth and return the industry into positive growth territory. However, a significant slowdown from the average growth experienced between June and November of 2021 persists. Compared to January, all industry segments have improved their sales growth month to date. Through the first three weeks of February, the best performing segments are fine dining, fast-casual and quick service. Through the first three weeks of February, sales growth was positive in 36 states, improving from the 28 states in January. Based on sales growth, the best performing regions are Southeast, Florida, Western, and California. The regions with the weakest sales growth are New York-New Jersey, the Midwest, Mid-Atlantic, and Southwest.
STAYING SHORT LABOR-INTENSIVE CASUAL DINING
Seeing commentary from some analysts that suggest healthy consumer spending will likely continue driving sales growth in 2022. I'm on the other side of that trade! Labor is terrible and getting worse ($TGT), and now food inflation could intensify, suggesting that elevated labor/food costs have not been baked into estimates. How will price increases as an offset rising costs impact demand?
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