• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Industry same-store sales and traffic trends are out for April.

Malcolm Knapp reported April same-store sales and traffic results of -2.1% and -4.0%, respectively.  For same-store sales, this constitutes a two-year average number of -3.8%, which is down sequentially from the -3.0% (revised) two-year average decline in March.  The traffic number represents a two-year average of -5.4%, a sequential decline of 140 bps from March’s two-year average traffic number.   This sequential slowdown in comparable sales contrasts with the majority of insights into April sales provided by management teams recently.  While the weather impact dragged comps for much of the quarter, overall management teams struck a positive note on improvement in top line trends seen in the back half of the quarter continuing into April.  Refer to our 5/6 post “RESTAURANTS COMMENTARY ON 2Q TRENDS TO-DATE” for additional details.

In terms of the general consumer environment, Knapp signals the ongoing financial crisis as the primary cause of weakness in sales.  This is reflected, according to Knapp, by increasing mortgage defaults and continuing high levels of unemployment and underemployment.   Value propositions, wrote Knapp, “continue to be very important.  It is important to note that it is not just the quality of the value prosition (sic) but also the efficacy of the messaging”. 

As the second chart (below) shows, the level of discounting seen for a large part of 2009 is well and truly in the rear-view for casual dining with comparable sales exceeding comparable guest counts by 1.9% in April.  However, as Knapp points out, value is still a key driver of traffic.  For the months May through November of 2009, comparable guest counts exceeded comparable sales.  This is unusual and the past five months have brought a return to the traditional positive spread between comparable sales and comparable guest counts.  

CASUAL DINING – APRIL TRENDS - discounting spread

Howard Penney

Managing Director