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The Knapp Track numbers for June suggest a slight sequential improvement in casual dining trends from May.  Timing related to 4th of July celebrations inflated the number, however, as the estimate (based on weekly data) takes into account the last week in June which includes July 1.  When the account results are released for June, Knapp says, the difference between the estimate based on weekly data and the accounting month will be +0.4-0.6%.  Tellingly, traffic trends continue to decline.

Calendar Shift

Knapp noted that the estimates for June were based on weekly data, which included July 1st.  Last year, many cities and towns held firework displays to celebrate the 4th of July on Saturday (7/1/11), which lowered casual dining sales.  This year, celebrations were held primarily on the 4th, a Wednesday.  This shift boosted Knapp Track estimated casual dining comparable restaurant sales growth because the data is based on weekly results and the last week in June included July 1 this year, a week which showed a large increase in sales. 

Results

Estimated Knapp Track casual dining comparable restaurant sales grew 1.1 % in June versus an estimated -1.3% in May.  The sequential change, in terms of the two year average trend, was +150 bps.  However, if we assume the accounting number for May will be in line with the estimate, and the accounting number for June will be 40-60 bps below the estimate (as Knapp suggests it might be), the two year average trend will likely be closer to +125 bps.

Estimated Knapp Track casual dining guest counts declined -1.2% in June versus an estimated -3.9% in May.  The sequential change from May to June, in terms of the two-year average trend, was +165 bps.  Even with the benefit of a strong last week, which included July 1st, traffic trends continued to decline in June.  With the pricing environment as competitive as ever within the space, and within the food retail industry more broadly, restaurant companies are under intense pressure to operate efficiently.

JULY KNAPP TRACK - cpi home away from home

Howard Penney

Managing Director

Rory Green

Analyst