Restaurant Sales Continue Growing, But The Pace is slowing.
Restaurant sales growth remains positive, but the last two months of the year showed some slowdown already in effect.
Same-store sales growth was +4.8% in December, an acceleration of +1.5% compared to November's year-over-year results. However, these two months were the weakest for restaurant sales growth since the industry rebounded in August 2022. Average sales growth for November and December was +4.1%, compared with a more robust +5.1% average between August and October. The biggest struggle for restaurants continues to be growing their guest counts. Traffic growth was -3.5% for December, representing a +0.8 improvement compared with the previous month's growth rate. However, December's number could only climb back to where the industry was before. The average traffic growth between August and October 2022 was also -3.5%. From Black Box "Aside from Q1, which was negatively affected by the Omicron variant, in most respects, 2022 has been the first "normal" year since the lockdowns. But consumer behavior has yet to return to pre-pandemic norms."
EAT Earnings
EAT is tracking higher with its new pricing strategy; still, work is to be done. The tone of the conference call will be important.
Total sales rose 10.2% during the year, and comparable sales were up 9.7%, consisting of an 8.0% gain for the Chili's chain and 21.2% for Maggiano's. The 9.7% comp was ahead of the 6.1% consensus estimate. Incremental menu pricing and a favorable mix helped sales to increase. EAT reported an operating income of $40.7M vs. $39.8M a year ago. Operating income was 4.0% compared to 4.3% a year ago, with more room for improvement; the restaurant operating margin was 11.6% of sales vs. 12.1% a year ago. The company noted that commodity inflation for the quarter increased meaningfully YoY and will continue to be a headwind at a slowing rate for the rest of the fiscal year. Looking ahead, EAT sees revenue of $4.05B to $4.15B in FY23 vs. the consensus mark of $4.04B.
