Increasing same-store sales is the Holy Grail for restaurant operators and investors. For a restaurant to be financially successful, sales must increase over the same period in the prior year. To take the temperature of local restaurants we surveyed October 2009 same-store sales for 52 closely-held, mostly Atlanta-based restaurants.
The result? In the aggregate, restaurant sales in October are flat. Total sales for October 2009 increased less than 1% over sales for October 2008.
How are individual restaurants doing? Of the 52 restaurants surveyed 24 or 46% of the total recorded increased sales over October 2008. Twenty-six restaurants or 50% of the sample showed decreased sales compared to last October. Two restaurants showed no change in sales.
We also looked at how these restaurants are doing year-to-date 2009 compared to 2008. The results are sobering. We narrowed the sample to 48 restaurants. Of the 48, only 10 or 21% of the sample had 2009 sales higher than year-to-date 2008 sales. Thirty-eight restaurants or 79% of the sample showed decreased year-to-date sales compared to 2008!
Conclusion: By October 2008 the national recession had seized the local restaurant market. Consumers were reining in their spending. Restaurant sales were already headed down. In October 2009 while total restaurant sales are not getting worse; they are not getting better either. We are “bumping along the bottom” – the sales “bottom” created when the recession latched on to consumers’ wallets.
The Sample: The 52 restaurants were drawn 90% from the metro Atlanta market. The sample includes restaurants in the fast casual, casual and fine-dining market segments. All sales were reconciled and therefore carry a high degree of accuracy. Aggregate sales from the sample for October 2009 were $9.01 million. For October 2008 aggregate sales were $8.95 million.
Robert Wagner, CPA is president of NetFinancials, Inc. which provides a full range of tax and accounting outsourced services for restaurant companies. Email: bob.wagner@netfinancials.com. www.netfinancials.com
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