Chain Restaurant Traffic and Sales Slip Further

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February brings little improvement in sales and traffic for chain restaurants

According to a recent report, the first quarter of 2017 brought little solace to restaurants and bars hungry for customers.

Same-store sales fell 0.4% in March, the 4th straight month of decline and the 9th time in the past 10 months that sales sagged. Worse, traffic declined 2.5%, the 13th straight monthly drop. These startling revelations come to us from a MillerPulse survey reported by Nation’s Restaurant News.

"The first quarter was the worst quarter in seven years," said Larry Miller, co-founder of the survey.

While these numbers don’t show growth, Miller told NRN that the decline was an improvement on previous months, especially compared to February when sales dropped 2.6 percent. The 2.5% decline in traffic was the best result since November.

Same-store sales are a key indicator of consumer confidence and interest. As competition, economic worries, and changing drinking and dining behavior continue to impact the industry, many chains have been forced to look for ways beyond increasing customers for profitability.

No sector of the chain restaurant industry has escaped unscathed, with casual dining, quick-service and high-end all seeing drops in traffic and sales. According to NRN, traffic has been negative in every month except three in the past 26 months.

The lack of growth has had its impact. Just this past March, DineEquity announced that its Applebee's chain expects to close between 40 and 60 restaurants during 2017. The embattled chain is struggling to attract customers in a market in which fewer people eat out, and more of those who do dine out are opting for fast-casual restaurants. DineEquity said Applebee's would continue to struggle in 2017, forecasting same-restaurant sales to decline by 4% to 8% for the year.

Also in March, venerable chain Ruby Tuesday was up for sale. The company said a sale or merger are among the "strategic alternatives" designed to "maximize shareholder value and position the business for long-term success." The announcement came just as the chain announced sales declines of 4%, with a 17% drop in the previous quarter alone.

Ruby Tuesday has 613 restaurants in 42 states, including 67 franchised locations and 546 company-owned stores. Last year, the chain announced it was closing 95 restaurants nationwide, about 13% of all its properties. The chain had already closed 12 locations, as well as all 17 of its LIME Fresh Mexican Grills, in 2016.

This news follows an announcement made in February by Bloomin’ Brands, parent company to Outback Steakhouse, Carrabba’s, Bonefish Grill, and Fleming’s Steakhouse chain, that 43 units would close in the US this year.

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