So there we have it!
There has been lots of chatter as to why the high-frequency data is pointing to strong sales trends in January, and Blackbox just gave us the river card. But it is not time to celebrate yet as the collector of sales data says, “January’s impressive sales growth is not an accurate representation of the strength of the industry.”
Blackbox is reporting that January restaurant sales reached the highest sales growth in 4 years, at 2.3%. The 3-month moving average increased sequentially to 0.6% from 0.0%, and the LTM was flat sequentially at 0.2%.
Same-restaurant traffic declined 0.73% for January. The 3-month moving average improved sequentially to -2.5% from -3.3%, and the LTM was flat sequentially at -3.0%. The average check came down by 0.6% sequentially to 3.0%. Delivery is likely helping on the margin, but nearly 90% of all the stores reporting to Blackbox offer delivery.
In 1Q, January is typically a throwaway, with March the most critical month of the quarter, and this year March has one less Friday and Saturday. January had an extra Friday.
According to Blackbox, the milder weather is evident by strength in the Mid-west and Northeast. “The Mid-Atlantic, New England, the Midwest, New York-New Jersey, and Mountain Plains region all achieved same-store sales growth over 4.0%. The areas that had weaker growth were from those where warmer weather is the norm, and Texas was the only region that achieved negative sales at -0.5%. I must admit this makes Chili’s strength all that more impressive.
We see no reason to change our bearish stance on the industry based on what we see in January.
