Restaurants in US hit bump, any UK read-across?

January 11 2017

Gloomy comments Stateside:

  • 4 Jan: NPD Group says ‘a restaurant industry that struggled with weak sales and traffic in 2016 shouldn’t expect much improvement in 2017.’
  • 4 Jan: NPD ‘expects restaurant industry traffic to remain stalled in 2017’. It sees a shift from dine-in to quick-service
  • 4 Jan: NPD says there are ‘more restaurants than visitors.’
  • 6 Jan: Nation’s Restaurant News says Netflix growth is increasing competition for customers’ time & money.

Company comments in US:

  • 6 Jan: Ruby Tuesday says Q2 (to Dec) LfL sales down by 4.1%. CEO says ‘results of Q2 were disappointing.’
  • 11 Jan: Chipotle expects LfL sales to fall 4.8% in Q4. This would still mark best for 5 quarters. Admittedly it was hit by an E.coli outbreak in Oct 15
  • 11 Jan: Chipotle LfL sales down 15% on 2yrs ago.
  • 11 Jan: Shake Shack is increasing prices ahead of ‘wage hikes’
  • 11 Jan: Kona Grill reports Q4 LfL sales down 4.1%. Says sales were ‘weaker than anticipated’ & blames ‘weak retail traffic, inclement weather & influx of new competition’.

Above in context:

  • Some consistency here
  • Companies spinning it with ‘as you know, things are currently very tough…’
  • But did we? Really?

Implications for UK:

  • Overcapacity, price-gouging, mediocre product (featuring high-rent units, costly labour & a less-than-relevant offer) will pay-back negatively in any kind of slowdown
  • We should look more critically at ‘0 to 60’ superstars: Ed’s, Bill’s, Five Guys, Strada etc.
  • Consider RTN’s volte face, JDW’s pub sales, slowed expansion, Jamie’s closing 6 etc.
  • Expensive, entitled offers may fall foul of a more discerning (a.k.a. penny-pinching) consumer
  • This is still a growth industry – there’s a critical difference between ‘simple’ and ‘easy’
  • Saying ‘back winners’ is simple. But it’s not easy