July shows boost in dinner-house sales

Nation's Restaurant News, Oct 4, 1993 by Malcolm M. Knapp

What is Knapp-Track[TM]?

Knapp-Track[TM] is an exclusive report on the casual theme and dinner-house segment, presented on a monthly basis. Based on actual, unpublished results received from key chains, Knapp-Track[TM] offers a more realistic gauge of the segment's performance than do the top-line date released in public reports.

The monthly same-store sales data are indicative of basic industry health, while the same-store customer traffic reflects the underlying strength of consumer demand.

Monthly all-store sales provide a benchmark against which the reported sales change of published quarterly reports can be measured; monthly all-store customer traffic is a proxy for real growth.

Finally, the year-to-date comparisons for all four categories provide perspective as the year unfolds, giving a fix on where the business is at any point in time.

Knapp-Track[TM] subscribers, representing more than $6 billion in annual sales, include Acapulco, Charlie Brown, Chevys, Chi-chi's, Chili's, El Torito, Houlihan's, Olive Garden, Pizzeria Uno, Red Lobster, Ruby Tuesday, Sizzler and Tony Roma's - A Place for Ribs.

The results for July are significantly better than those of any other month in 1993 or 1992 - with the exception of last December.

While the Consumer Confidence Survey of The Conference Board registered a very small gain from June to July - only 0.6 index points - in the Consumer Confidence Index, the survey did show a robust gain during the same period - 5.8 points - in American's feelings about their current situation. However, their expectations for the next six months diminished by -2.8 index points.

The index that measures Americans' perception of their current situation rose by 15.1 points from July 1992 to July 1993, while the index measuring expectations for the next six months dropped by-13.3 points.

Given the state of the economy, the lack of progress in jobs creation, the blistering summer heat wave and the flooding of the Mississippi, we should probably have expected the American public to feel worse. But sometimes people just get tired of feeling bad.

And since food-away-from-home sales contain a significant impulse purchase component, how people feel today is usually a better measure of sales activity than their future economic expectations. Consequently, as public confidence in the current situation has improve, it's not that sales trended upward in July.

Another factor in the upswing likely could be traced to the qualitative improvement in service standards and food quality at several chains and their concomitant increase in same-store sales. There is a clear message that consumers send: "If you provide excellent quality service, food and value, we will come to your restaurant. If you don't satisfy our needs and desires and standards, we will go next door."

In the present environment marked by the public's perception that the standard of living is being restricted, consistent quality and no disappointments are what the consumer demands.

But as many operators are quick to point out, volatility is the key characteristic of the times - one day business is up, and the next day it is down without any significant cause.

In July, nine of 11 Knapp-Track[TM] regions logged same-store sales increases. The best performing regions were West North Central, New England, Florida and Mountain. The worst performing areas were California and the Pacific Northwest.

Eleven regions had positive same-store customer counts. The spread between best performing region and worst performing region was 8.2 percentage points - an improvement from the 9.1 percentage point spread of June.

Same-store sales increased 2.0 percent in July, while same-store guest counts were up 1.1 percent. The spread between same-store sales and guest counts is 0.9 percentage points, not as close as the 0.4 percentage point spread of June - but better than most months for the past year and one-half. The spread between same-store sales and all-store sales is 8.9 percentage points, slightly wider than the 8.7 percentage points of June but well below the 13.8 percentage point peak Of April 1992.