Major Restaurant Chains Are On a Roll; The NPD Group Reports 86 Weeks of Same-Store Sales in the Black

Business Wire, March 7, 2005

PORT WASHINGTON, N.Y. -- The restaurant industry is enjoying more than a year and a half of positive growth according to The NPD Group's SalesTrac(R) Weekly which tracks same-store sales' trends from 53 Quick Service and Midscale chain restaurants or more than 40,000 restaurant units. The latest sales figures show dollars at these restaurants opened over a year are up for the 86th week in a row. For the week ending February 21 same-store sales are up 4.6 percent from a year ago. The average increase in same-store sales over the 86 weeks is 4.4 percent.

The upswing in sales comes off of weakness in the industry in 2002 and 2003, some of the most difficult years for restaurants in decades. NPD recorded 2 years in a row of no traffic growth. Then in July 2003, same-store sales for major restaurant chains turned positive and have been heading upward ever since.

"It's been an amazing run. If you look at the long-term trend, the restaurant industry was anemic for about a year from 2002 to 2003, then you see a solid block of strength. It just kept going and didn't stop," said Michele Schmal, vice president of product management in foodservice. "Nothing like a little weakness like we had in 2002 to get the big chains to flex their marketing muscle with new products, new promotions and new ads...and it's working. Independently owned restaurants overall are having a tough time keeping up," said Schmal.

The chain restaurants are taking market share from independents. According to CREST, a service of NPD Foodworld, major chain restaurants captured an additional three percent of the market between 2001 and 2004. Share for small chains was fairly stable as the loss came from independent restaurants.

Schmal says consumer demand has been driven by quick service outlets serving up new menu offerings focused against higher quality, more innovative foods. NPD, a market research firm, has tracked growth in foods such as higher quality chicken products, premium burgers and main dish salads.

"The industry is giving people more choices and making it easier to get a better variety of food at very affordable prices," said Schmal. "We have to see if this will pull customers out to use all restaurants more often in the upcoming year...including the local independent operator," said Schmal.

SalesTrac(R) Weekly is an analysis of restaurant same-store sales by segment and category based on actual sales obtained from chain participating restaurant operators. The aggregated information is reported back to subscribing operators and manufacturers each Friday for the prior week's trends.