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We now know that the improved trends in November were not a sign of a sustained recovery in casual dining demand.  Malcolm Knapp reported December same-store sales and traffic results of -4.9% and -5.4%, respectively.  Not only did trends fall off rather significantly on a 2-year average basis from November, but 2-year average same-store sales growth actually came in -7.2% with traffic down 8%, below December 2008 levels of -6.7% and -7.9%, respectively.

December was also the first month since April 2009 when comparable store sales growth came in better than traffic growth on a 1-year basis.  Malcolm attributed this 0.5% comparable sales outperformance to a lower level of discounting in December.  We know that weather was an issue in December, but decreased discounting may be largely responsible for the sequentially worse results during the month.  Brinker commented on its fiscal 2Q10 earnings call that it was phasing out its “3 Courses for $20 promotion,” which I said might be a little premature given the boost it has provided to traffic trends (EAT’s gap to Knapp widened to 1.7% on a 2-year average basis from 0.9% in the prior quarter).  Based on December trends, Brinker is not alone in its decision to decrease its reliance on discounting to drive guest counts, but the sequentially worse trends may signal that consumers have not recovered and are not yet willing to pay full price.  The industry has trained consumers to look for the best deals.