QSR – I’LL TAKE ONE JOB, HOLD THE BURGER

Earlier this week, I said that there appears to be a divergence of trends between QSR and Casual Dining (please see my January 6th post titled “RESTAURANT INDUSTRY – GLIMPSE AT DECEMBER”).  To that end, the chart below highlights the downward trend in QSR same-store sales growth in the U.S., with trends turning negative in the last three reported quarters and 2-year average trends coming in flat and -1% in 2Q09 and 3Q09, respectively.  Based on the recent news flow out of SONC and CKR, I would expect these trends to continue in 4Q09.

 

As I have said before, 16-19 year olds are an extremely important demographic for QSR operators and as the chart shows, the increasing rate of unemployment among this age group since 2Q08 has taken its toll on QSR demand.  Restaurant management teams across the industry have cited higher unemployment as the primary cause of weaker demand, but QSR operators have been more vocal about how the even higher rate of unemployment among its younger, core users has hurt trends.  Specifically, JACK management stated on its last earnings call, “In addition, unemployment rates for our core customer demographic which skews towards young males and Hispanics are substantially higher than the overall rates. According to the Department of Labor, on a seasonally adjusted basis, 16 to 24 year olds had a very rough summer in 2009, with fewer than 50% working.” 

 

The unemployment numbers for this key demographic came down slightly in November on a sequential basis from October, which on the margin, is good.  I think the industry will be in a much healthier position, however, once these numbers come back down to pre-2Q08 levels.

 

QSR – I’LL TAKE ONE JOB, HOLD THE BURGER - 1 8 2010 10 41 50 AM

 

QSR – I’LL TAKE ONE JOB, HOLD THE BURGER - unemployment by age 16 19


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