AUGUST RESTAURANT INDUSTRY REVIEW

August brought about several surprises in the drivers that impact sales. There was a retraction back to the “value conscious purchasing habits”
seen several other times in the recent years.

• In the QSR sector there was a noticeable move back to the value menu, especially at McDonald’s and Wendy’s. However, this sentiment was repeated across the entire sector in the form of value menu transactions and lower check averages.
• In the Casual Dining sector it was recognized by lower check averages, negative traffic and a drop in SSS.
• The only bright spot was in the Fast Casual sector.They were up in SSS for August.
• The industry as a whole was flat for August.

Even though consumer discretionary spending was up in August, driven mostly by “back-to-school” purchases, customer sentiment swung back to frugal spending.

In the current economic environment the consumer is exhausted from all the ebb and flow of news on the economy. Their first concern is how all this impacts them in their world – their home. In the last few years consumers have seen everything from groceries, utilities, insurance, gasoline and much more increase in cost while their pay has remained, for the most part, stagnant. Therefore, the safe bet is to become frugal once again and that is the shift seen in August.

FRANCHISEES / OPERATORS SURVEYED FOR THE MONTH:

SSS:

• 63% of QSR and Fast Casual reported up
• 56% of Casual Dining reported flat or negative

Traffic:

• 45% of QSR reported higher
• 43% of Fast Casual reported higher
• 49% of Casual Dining reported lower

Capital Expenditures:

• 49% plan to make capital expenditures in the next 6 months

MAJOR EVENTS FOR AUGUST:

Top 5 Concerns from Operators for the Month:

• Drought and subsequent impact on food costs 62%
• Gasoline prices rising 50%
• Weak economy 38%
• Weakened consumer confidence 24%
• Weak traffic 32%

Media spending overall was weak during August because of Olympics and Republican Convention.

• Overall operators reported:
• Outlook for economy deteriorates sharply in August
• Mixed sales results but majority expect higher sales in next 6 months
• Net decline in traffic
• Higher food costs
• Capital spending steady