Malcolm Knapp reported that March casual dining same-store sales declined 4.9% and traffic declined 6.5%. Both of these numbers represent a sequential slowdown from February when comparable sales decreased 4.0% and traffic fell 5.6%. According to Malcolm Knapp, the last week of March was bad and was largely responsible for the drop off in sales relative to February (took about half a point off March same-store sales numbers). This March slowdown in overall casual dining sales further highlights RT's improved performance as of late as the company stated that its comparable sales continued to improve in March off of February levels, further narrowing the company's gap to Knapp.
On a quarterly basis, 1Q09 average casual dining same-store sales came in better than 4Q at -4.3% relative to -6% with traffic -6.0% in Q1 versus -7.7% in Q4. Discounting is most likely driving the lion's share of this traffic improvement.
I would have thought that a sequential slow down in Casual Dining same-store sales would have caused more of a disruption in restaurant stock performance. Given the sector's stock performance of late, it appears that the market is more focused on costs and not sales. Significant cost cutting, lower commodity costs and reduced labor costs are helping restaurant operators manage margins for the time being. With cost cutting being "one time" in nature, it is only a matter of time before investors return to a more intense focus on same-store sales trends.