SLL likes to keep its eye on the real economy. Former standout the restaurant industry is hitting the skids. From Wolf Richter at wolfstreet.com:
What does inflation have to do with it?
Restaurants should have done well in February. The economy created 235,000 jobs, according to the Bureau of Labor Statistics. The big gain was ascribed to the weather – the warmest February in 100 years. Weather-sensitive industries, such as construction, went on a hiring binge. The exuberance should have led to activity at restaurants. Compared to Februaries when people stayed home because polar vortices marauded much of the nation, this time, the weather invited them to head out.
But no. Folks stuck in the real economy and not benefiting from the surge in stocks, or those who’re paying with their last dime for the surge in housing costs, they’re cutting back on restaurant meals.
Same-store restaurant sales in February dropped 3.7% and foot traffic dropped 5.0% from a year ago, according to TDn2K’s Restaurant Industry Snapshot.
This comes after a January report, from which emanated for the first time in a while some sort of gloomy optimism, titled with delicious irony: “Flat Sales, Welcome Change for Restaurant Industry in January.” It went like this: “While same-store sales growth was flat (zero percent) in January, it represented a welcome break from the ten consecutive months of negative sales growth experienced by the industry.”
That gloomy optimism has now too fallen by the wayside, and it was “not a turning point in declining industry performance,” the report now specified.
Over the last three months – with the gloomily optimistic January in the middle of it – same-store sales fell 2.7% and foot traffic 4.7%.
“A macro view leaves little room for optimism,” the report said, whose data is based on sales from over 26,000 restaurant units and 145 brands, representing $66 billion dollars in annual revenue. “February’s results were among the weakest in the last four years,” it said.
To continue reading: Restaurant Recession Meets February Debacle