Unemployment Matters

Spurred by the casual dining traffic chart I posted yesterday, someone asked me a question earlier today about casual dining traffic trends and whether the more severe fall off in trends in July and August was a function of year-ago comparisons and could trends have actually bottomed. I charted the year-over-year traffic declines on a 2-year average and 3-year average basis, which shows that the declines have not stabilized, but in fact, have accelerated their move downward. Not surprisingly, these declines have coincided with the rise in unemployment rates.

As my partner Keith McCullough said on his portal on September 5th regarding August’s 6.1% unemployment rate, we are still in the early innings of an accelerating unemployment cycle. Unfortunately, as this number climbs, we should expect to see increased deterioration of traffic trends at casual dining restaurants because as this chart clearly shows, easy comparisons have not meant anything for some time now.