The "Restaurant Recovery" Is Over: Casual Dining Sales Tumble For Fourth Straight Month
By Tyler Durden
While the US manufacturing sector has been in a clear recession for the past year as a result of the collapsing commodity complex, so far the stable growth in low-paying service jobs – at least according to the BLS’ statistical assumptions – such as those of waiters and bartenders have kept the broader service economy out of contraction (even though recent Service PMI data has been downright scary).
This is now changing: as we showed a month ago, according to the lagged effect of the collapse of the Restaurant Performance Index, that party is over:
… just like it was in 2008;
But while such macro indices suffer from the same calendar and statistical aberrations which the BLS is all too famous for, a confirmation of the troubling restaurant downward trend was provided yesterday by company-level channel checks, courtesy of Sterne Agee, which show that same store sales trends at America’s casual dining restaurants – those which cater to the vast majority of the US middle class – have suffered a fourth consecutive month of declines, something not observed since the first financial crisis, sliding a whopping 3% in March.
From Sterne Agee’s March 24 channel checks:
Our channel checks for casual dining suggest a decline in casual dining same store sales (SSS) trends in the first half of March. While it is too early to determine if this is a trend, it appears that a fourth month in a row of negative SSS may occur, which we believe would be a disappointment to investors.
Casual Dining Stocks are Under Pressure in Recent Trading: On a month-to-date basis, we note that casual dining stocks have been under pressure, with an average price decline of -3.1%, including bottom-tier performers: Buffalo Wild Wings -10.2%, Red Robin -8 4% and Brinker -8.3.
To be sure, Sterne Agee tries to spin this disturbing trend as faborably as posible:
While there is much debate on whether the discounting/promotional environment in the quick service (QSR) space is affecting casual dining, we think it is too early to call this a shift in consumer behavior or change in trend.
However, it is becoming all too obviouos that not only has the great gas price collapse of 2015/2016 done anything to boost consumer spending on such core discretionary items as dinner, but that the purchasing power of the US middle class continues to deteriorate with every passing month – having troughed so far in March – and that economists are clueless to explain the reason behind this.
And the worst news is that with gas prices set to anniversary their 2015 lows in a few months at which point they will start rising due to the base effect, suddenly the great “gas …read more
Source: The "Restaurant Recovery" Is Over: Casual Dining Sales Tumble For Fourth Straight Month
