Restaurant Industry Snapshot™ – November 2021
Industry Comp Sales & Traffic
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Restaurant industry sales in November were 8.3% stronger than November 2019. With a robust 2.3 percentage point improvement over October’s growth rate, November was the best month for restaurants in over a decade based on sales growth.
Restaurant traffic also improved in November. Traffic growth was -4.7%. At a 1.6 percentage point increase over October, traffic improved by a smaller margin than sales. The industry posted stronger traffic growth in April, June and July of this year. The biggest reason for concern continues to be that guest counts are far from rebounding to their 2019 levels despite the strong growth in sales.
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Regional & Market Performance
For only the second time since the beginning of the pandemic, 48 states posted positive sales growth. The only two states with a negative growth rate were Hawaii and North Dakota.
The best performing regions based on sales growth during November were the Southeast, Florida, Southwest and Texas. The regions with softest sales growth were the Midwest, New York-New Jersey, Mid-Atlantic and California.
The Restaurant Workforce
job growth & turnover
There was small progress in staffing levels during October; but, despite all restaurant efforts, the staffing shortages continue to have a negative impact on the industry. Limited-service restaurants operated each of their locations with about 1.4 fewer employees than they did in 2019. This was only a marginal improvement from being down 1.6 employees in September.
For full-service restaurants there was a bigger improvement for front-of-house employees, but shortages among these employees continue to be greater overall. On average, full-service restaurants ran each of their locations with 4.4 fewer employees than they did in 2019. By comparison, front-of-house was down by an average of 5.5 employees as of September and even more in June. For back-of-house employees in full-service restaurants the improvement in staffing levels was much more moderate. On average, these restaurants ran with 1.6 fewer employees in those positions per location in October.
Check Growth Grew by 13.9% in November
The unusually high increase in average guest check is the reason the industry continues to achieve growth in sales despite continuously losing traffic. During November, average check grew by 6.6% year over year, which is the highest it has been since March. Average check growth accelerated by 1.1 percentage points compared to October. On a 2-year basis, average check grew by 13.9% during November, which was second only to the 14.3% recorded in September as the record high check growth in over a decade.
Menu price increases are the driving force behind these dramatic increases in average check. In turn, prices continue to be pushed higher by high inflation in commodity prices as well as labor costs.
Limited-Service Sales Growth More Than Double Full-Service
Throughout the pandemic, limited-service restaurants have posted better sales growth results than their full-service counterparts. In November, limited-service brands had sales growth of 13.2%, more than twice the 5.6% sales growth for full-service restaurants.
For the seventh consecutive month, fine dining was the top performing industry segment followed by fast casual, quick service and upscale casual. These segments all posted double-digit sales growth rates in November. Family dining climbed into positive sales growth territory for the second time since the beginning of the pandemic. However, sales growth was modest for the segment during November as well as back in July, which was the only other month with positive sales growth for family dining.
Lunch and Breakfast Post Strongest Sales Growth in Over 3 Years
All dayparts improved sales growth during November. The daypart with the largest sales growth continues to be mid-afternoon, which has posted double-digit growth since March. The largest dayparts are now also among the top performing ones, which is encouraging for the industry. Dinner had the second-highest sales growth during November, followed by lunch.
The two dayparts with the biggest improvement in sales growth during the month were lunch and breakfast. These dayparts have been slower to recover given their higher reliance on the usual pre-pandemic daily routines tied to going to work outside the home. Both dayparts had their strongest sales growth performance in over three years.
The only daypart that continues suffering from negative sales growth is late-night, but the month tied for best sales performance since the beginning of the pandemic.
The consumer confidence index fell to a nine-month low in November. One of the concerns that has been hitting consumers the hardest has been the rapid rise of inflation. With consumer prices raising by 6.2% in October, the largest year-over-year increase in 31 years, there are obvious reasons for consumers to be less confident. However, the consensus among economists continues to point towards strong economic growth in the fourth quarter; much stronger than what was experienced in Q3.
Another concern is Omicron, the newest Covid variant. There doesn’t seem to be enough information yet to make an informed prediction on its effect on restaurants. Yet, the message behind this is clear that we are not completely out of the woods when it comes to the pandemic.
“We continue to be optimistic for a strong holiday season when measured through the lens of 2-year same-store sales growth,” said Victor Fernandez, vice president of insights and knowledge for Black Box Intelligence™. “Traffic will likely remain a challenge due to rapidly rising prices but we are still confident consumers want to unleash some of that pent up demand that resulted from having to skip much of their usual celebrations during the holidays last year, especially when it comes to dining out.”
*Unless otherwise indicated, numbers are reported using 2-year growth metrics
*Unless otherwise indicated, all sales & traffic metrics are same-store sales & traffic metrics
*Off-premise sales includes to-go, delivery, and drive-thru sales (where applicable)
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.