Malcolm Knapp reported that July casual dining same-store sales declined 8.4% with traffic -7.7%. For the third consecutive month, comparable guest count results were better than sales, which points to the significant discounting in the industry.
Sales trends have worsened on a sequential basis throughout the year. After somewhat of a rebound in sales following the difficult 4Q08, sales have now fallen to a level that is not much better than December. On a two-year basis, July comparable sales are down 6.2%, only 60 bps better than December and traffic is down 7.0%, improving 90 bps from December.
It is going to be increasingly more difficult for restaurant operators to maintain margins in this sales environment as they can’t maintain their current pace of cost cutting and will soon be lapping the initial implementation of these cost saving initiatives.
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