Restaurant Industry Sales Slow

Trouble is brewing for the restaurant industry as sales have flatlined over the past several months. The National Restaurant Association’s Restaurant Performance Index (RPI), which tracks the industry’s health, declined for the second consecutive month in June, and fast-food sales have stalled since March.

The RPI’s Current Situation Index hit 99.9 in June, down .3% from a level of 100.2 in May and the first time in five months that the index dipped below the 100 level. Its Expectations Index dipped to 100.7 in June, down .4% from May and its lowest level in six months. “The uneven trend that the RPI followed during the first half of 2016 was due in large part to choppy same-store sales and customer traffic results,” said Hudson Riehle, senior vice president of research for the National Restaurant Association.

In addition, fast-food sales – which had increased by about 2% per quarter since September of 2015 – have ground to a halt since the spring. “[That’s] a red flag because it’s been an area of growth and it’s 80% of the industry,” NPD restaurant analyst Bonnie Riggs told The Wall Street Journal.

About 43% of restaurant owners reported a same-store sales decline between June 2015 and June 2016, while 49% said their customer traffic declined in the same period. Only 33% expect to have higher sales in six months compared to the same period in the previous year, and 18% expect their sales volume to be lower than it was during the same period in the previous year.

Bret Bonnet, president of Quality Logo Products (asi/302967), says that if restaurants want to reverse their declining sales and increase the number of store visits at existing locations, they first need to stop raising their menu prices. With the cost of eating out on the rise and the price of food away from home on the decline, Bonnet says, restaurants need to focus on offering clients more value.

That’s where promotional products enter the equation. “Restaurants should consider promoting the value they offer, whether that be time savings, convenience, or price savings compared to eating at home,” Bonnet says. Of course, the promotional product used to accomplish this task would depend on the value the specific restaurant wants to focus on, the size of the campaign (local vs. national), and the type of restaurant (self-service, fast food, sit-down, or fine dining).

Bonnet says the strategy is to begin promoting your brand on mobile devices because that’s where buying decisions are being made. “I'd focus on a product that would get your name in front of your client before the customer even finds the need to begin searching, with items like a cell phone wallet, charger, stand, or screen cleaner,” Bonnet says. “All of these items are affordable, easily distributable, and mobile-friendly.”

Blake Hardin, partner and marketing strategist at Proforma Springboard Promotions (asi/491836), primarily works with chain restaurants, operating their online stores and providing them with signage, apparel and a variety of promotional products. He says that business has been on the rise over the past several months, seeing continual upticks in franchises opening new locations.

“Restaurants in tourism areas like major cities or beach towns tend to order a lot more promotional products,” Hardin says. “They’re always trying to come up with great designs and catchy messages that will attract customers and carry over onto other products.”