guestXM – by Black Box Intelligence

December Ends 2020 with Exasperating Sales Results; Final Week Offers Reasons for Optimism

December saw a tumultuous end to 2020 for the restaurant industry, with significant declines in sales. However, the final week of the month hinted at potential recovery, giving a glimmer of hope for the year ahead.

Restaurant Industry Snapshot™ – December 2020

Industry Comp Sales & Traffic

A combination of increased COVID-19 cases and colder weather contributed toward discouraging sales results for the restaurant industry. Same-store sales were -13.3% for December; same-store traffic fell -18.6%. Limited-service brands continue to outperform full-service brands by a wide margin. Comp sales growth for limited-service brands was positive in December, carried largely by fast-casual restaurants. The fast-casual segment was the only segment able to improve comp sales in December and posted the best results since February.

Off-premise sales jumped for full-service brands, fueled in part by an increase in dining room closures. Another effect of dining room closures is declining alcohol sales for full-service brands and the late-night daypart. Only 10% of full-service sales were from alcohol in December, down from 11% in November and the 14% norm from the months pre-COVID.

Regional & Market Performance

California is struggling, which is not surprising considering the spike in COVID cases and increased dining restrictions. Comp sales performance for California declined by 33 percentage points over the past few months.

The top performing regions were the Southeast, Florida, Southwest, and Texas. Florida sales rebounded, moving them up to the second strongest region in the country, up from fourth place in November.

The Restaurant Workforce

Job Growth & Turnover

*Black Box Workforce Intelligence, December 2020 Release

The loss of 372,000 more jobs in December is not encouraging for the restaurant industry already suffering a weak labor market. Discrepancies in compensation practices across positions and segments contribute to the increased staffing pressures faced by operators. General managers in full-service restaurants are taking home less pay largely, in part, to receiving lower bonus payments.

To find and retain talent, the industry is dealing with increased competition from other industries that can pay more and are growing at a faster pace.

In December, the restaurant industry posted the worst results seen since July. Same-store traffic growth was -18.6%, 3 percentage points lower than November. Same-store sales growth was -13.3%. This was the second consecutive month that year-over-year sales growth fell by more than 3 percentage points compared to the previous month. This trend, which started in November, can be attributed to an increase in COVID-19 cases and winter weather hindering outdoor dining.

“Although these results are discouraging, there may be some good news,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence™. “Same-store sales growth for the last week of December improved by nearly 7 percentage points compared to the previous week and was the best for the industry since the first week of November.”

This uptick in performance could be the result of two events that occurred during the last week of the year. First, the New Year’s holiday could have unleashed significant pent-up demand as consumers sought to celebrate the end of an extremely challenging year. Second, new stimulus checks began to be distributed that week which could have boosted consumer confidence and fueled additional restaurant spending.

Average Spend Per Guest Growing at Double the Rate of 2019

Average spending per guest grew by 6.6% year-over-year, remaining essentially flat from the growth rate reported for November. Average guest spending continues to rise rapidly compared to the pre-pandemic period. Average year-over-year growth since April was 6.7%, compared to 3.2% for all of 2019.

Guest check growth has been much higher for brands in limited-service* than for any full-service** restaurant segment; a trend consistent throughout the pandemic.

*Limited-service segments: quick service and fast casual
**Full-service segments: family dining, casual dining, upscale casual and fine dining

Limited-Service Sales Performance Over 25% Better Than Full-Service Brands

Quick service and fast casual restaurants continue outperforming the industry by a wide margin. Same-store sales growth for these segments was +1.7% in December, while full-service sales fell by -25.3%. While sales growth for limited-service restaurants remained positive and only dropped by 0.7 percentage points compared to November, full-service restaurant sales losses worsened by 6.7 percentage points during the month.

Fast casual was the only segment able to improve same-store sales growth in December compared to November. Based on same-store sales growth, December posted the best results for the fast-casual segment since February. The only other industry segment that has been able to achieve positive sales growth since the beginning of the pandemic is quick service.

Dining Room Closures Continue to Take Their Toll

As the number of coronavirus cases increased rapidly in some regions, dine-in restrictions increased and more restaurants closed their dining room doors. Some restaurants that were operating dine-in businesses through outdoor seating were affected by the colder weather. For December, the growth rate for dine-in sales was –53.3% and 42.6% for full-service.

The states that experienced the largest percentage of chain restaurant closures were Alaska, Nebraska, South Dakota, Wyoming, Hawaii, Illinois, Connecticut, Minnesota, Kansas, and New York. The District of Columbia has also suffered a significant impact in terms of restaurant closures. About 8% of all chain restaurant locations in operation pre-pandemic remain completely closed. Many of those locations are expected to stay closed permanently.

For months, there has been a significant gap between those quick service and fast casual locations that are open in a limited capacity and those that also had their dining rooms open. Many limited-service restaurants elected to keep their dining rooms closed despite lifted restrictions on them. But in December, the percentage of limited-service restaurant locations with dine-in sales fell from 67% to 62%. For full-service, the percentage of locations offering dine-in fell from 81% to 74%.

Off-Premise Sales Growing, Again

While dine-in sales growth fell, there was a considerable jump in off-premise* growth for full-service restaurants. This is partly the result of dine-in guests purchasing off-premise meals due to the increase in dining room closures. Limited-service brands experienced lower year-over-year off-premise sales growth during the month.

The already elevated mix of total sales represented by off-premise increased during December as a result of the shifts in dine-in and off-premise sales growth. Consumer behavior is much like we saw earlier in the pandemic. Due to health risk fears, dine-in regulations, and colder weather, more meals are being purchased outside restaurants. Off-premise represented 86% of all limited-service sales and 41% of full-service restaurants during the month. For reference, in the months before the pandemic, off-premise sales represented 71% of limited-service and just 13% of full-service sales.

*Off-premise sales represent to-go, delivery, and drive-thru sales when applicable

Big Sales Declines in Alcohol for Full-Service and the Late-Night Daypart

Full-service restaurants continue to see a smaller mix of alcohol sales than they did pre-COVID. In December, 10% of all full-service sales (including the dollars that came threw off-premise channels) represented alcohol sales. Alcohol mix was down during the month compared to the 11% alcohol sales in November and the 14% captured by full-service restaurants in the months before COVID.

For the second consecutive month, the industry experienced a drop in same-store sales across all day parts. In December, late night not only remained the worst performing day part in terms of same-store sales growth (as it has throughout COVID), but it also was the daypart that experienced the biggest drop in year-over-year sales growth performance compared to November.

The mid-afternoon daypart remains the strongest for the industry based on sales growth, followed by breakfast and dinner.

Florida Sales Rebound, California Down by 33%

All regions except for Florida saw a drop in their same-store sales performance during the month. The Southeast, Florida, Southwest, and Texas were the best-performing regions. All these regions had same-store sales better than -10%. Florida, which ranked fourth back in November, has become the second-strongest region of the country based on restaurant sales.

The regions with the weakest same-store sales results during December were California, New England, New York-New Jersey, and the Mid-Atlantic. The situation in California is particularly worrisome, as coronavirus cases continue to skyrocket and restaurant operations are restricted. Same-store sales performance in the state has deteriorated by 33 percentage points over the last two months and is the worst-performing region in the country.

An Already Weak Restaurant Labor Market Lost 372,000 Jobs in December

After seven months of job recovery, the number of people employed by restaurants fell again in December. Over 2.4 million restaurant jobs that existed at the beginning of 2020 remain unfilled. Even more troubling is the fact that about 372,000 restaurant jobs were lost in December, according to the Bureau of Labor Statistics. The industry seems to be reverting to a place where it was earlier in the recovery process.

Compensation Practices Differ Among Segments and Positions

Average hourly wages for limited-service, frontline employees remained flat year-over-year at the national level during the third quarter. But for full-service line cooks, the story is different. Average hourly wages for cooks increased rapidly year over year. Back-of-house positions were harder to fill before the pandemic and now may require some additional pay to attract and retain the best talent. As staffing levels were cut in full-service restaurants, those that remained were likely the most seasoned and tenured cooks, which also contributed to average wages showing bigger increases.

For general managers, there has been moderate growth in base salaries year-over-year (in the 1.5% to 2.0% range) for all segments. The increases have been slightly higher for those in limited service, which is not surprising given their better performance in the marketplace.

There are larger discrepancies in management compensation on bonus payments. Bonuses have held up for limited-service general managers given their industry-leading sales performance, resulting in growing total compensation year-over-year. However, the total compensation of full-service general managers has dropped considerably because of lower bonus payments. For these managers, not only are they having to deal with the heightened scrutiny and attention to detail from guests, the worries of keeping guests and team members safe, and declining business results, but they are also having to do this while seeing their take-home pay shrink compared to what they received in 2019.

Economic Conditions Expected to Improve in the First Half of 2021

“The economy and the virus are handcuffed together,” commented Joel Naroff, president of Naroff Economic Advisors. “With the virus out of control and new shutdowns implemented, the economy hit a rough patch at the end of 2020. Massive job losses in the hospitality industry led to employment falling in December overall. But many of those restrictions were temporary and are being eased already. Job gains are expected to return in January. That could cause a temporary improvement in growth during the early part of this year.

“However, until the virus is brought under control, the ability of the economy to expand strongly will be limited,” continued Naroff. “Even then, the massive damage done to businesses and households will have to be repaired. Stimulus programs are crutches, not cures. Restaurants may see an initial bounce during the first half of the year as conditions improve and restrictions are lifted. But it will then take an extended period for the economy to fully recover, so expect growth to be moderate, at best, in the second half.

Looking Ahead

Navigating Uncharted Waters: Challenges and Hope for the Restaurant Industry in 2021

The industry has hit a considerable roadblock on the path to recovery. The impact of this will linger for weeks if not months. Many of the underlying conditions, such as an elevated number of COVID-19 cases and colder weather, will take some time to overcome. “January is not expected to be a strong month for restaurant growth,” stated Kelli Valade, CEO and president of Black Box Intelligence. “While the industry is still battling these new challenges, it is also lapping over a month with exceptionally favorable weather last year that resulted in strong same-store sales growth. There is the advantageous effect of stimulus checks, which is expected to help, but headwinds remain strong.”

Returning to 2019 sales performance levels is unlikely. Nonetheless, there are many signs of encouragement for the restaurant industry. The potential for further government aid to consumers and businesses from the change in administration, as well as reaching greater coverage in the number of people vaccinated and the return of outdoor dining all offer hope for true improvement for restaurants.


The Black Box Intelligence Restaurant Industry Snapshot™ includes industry-leading financial performance metrics including sales and traffic from the largest set of real restaurant data at the region and market level. This monthly update also includes workforce trends, as well as expert commentary from Black Box Intelligence analysts. Each update provides context around economic conditions, regional benchmarks, and a look at what’s to come.
Black Box Intelligence™ is the leading performance benchmarking provider for the restaurant industry connecting the dots on people, profits, and performance. Their unparalleled data set reveals insight into financial, workforce, guest, and consumer trends from over 300 brands and 87,000 restaurant units. Black Box Intelligence is also the producer of The Best Practices Conference held annually in Dallas, Texas.

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