The estimated Knapp Track numbers for August suggest a slight sequential improvement in casual dining trends from July. Traffic, however, continues to decelerate.
Estimated Knapp Track casual dining comparable restaurant sales grew 0.8% in August versus an estimated 0.6% in July. The sequential change, in terms of the two-year average trend, was -45 basis points.
Estimated Knapp Track casual dining guest counts declined -1.7% in August versus an estimated -1.8% in July. The sequential change from July to August, in terms of the two-year average trend, was -70 basis points.
Black Box Intelligence
Black Box Intelligence released its casual dining index comparable restaurant sales growth for August earlier this month. Comparable sales grew 1% last month while traffic declined -1.1% and price grew 2.2%. The Knapp-Black Box spread was at -0.2% in August, which could imply that Darden underperformed since Darden is included in Knapp but not in the Black Box data. To be clear, there are several differences between the Knapp Track and Blackbox data sets so the spread is not a sure-fire indicator of a slowdown in Darden comps but, given the size of the Darden system, we believe that the spread between Knapp Track and Blackbox is likely relevant for Darden’s top line trends. The spread was +0.8% in February, which was a strong month for Darden (Red Lobster, in particular). Since then, however, the spread has been negative through August.
Pricing Power Pressure
The restaurant industry’s pricing power is under pressure, currently, as Food at Home CPI is now well below Food Away from Home CPI on a year-over-year basis.