BJ reports no change to consumer order patterns & an increase in late-night business (which generates a lower overall check average). Management also reported that minimum wage increases have not been impactful in driving its sales (as suggested by some economists).
Texas Roadhouse is not calling for a recession, but rather sees a benign economic situation. The consumer has remained resilient in their desire to dine at restaurants offering quality products along with a high level of value, service & hospitality. The chain’s restaurant margins & dollar profits should continue to improve assuming a steady pricing & macro environment.
Darden reported that industry same-restaurant sales increased +0.9% and industry same-restaurant guest counts decreased -4.2% during its fiscal 1Q24. The chain’s comps outperformed the industry by +4.1% and its traffic outperformed by +4.3% (= flattish traffic for Darden during the quarter).
Cracker Barrel’s fiscal 4Q23 sales began slowly and came in below expectations as the summer travel season was not as strong as expected. However, this headwind was offset by lower costs that boosted margins during the quarter.
Chili’s company store comp growth of +6.3% during fiscal 4Q23 reflected +9.4% price and +4.6% mix offset by a -7.7% traffic decline. Notably, quarterly dining room traffic improved y/y and there was no sequential frequency decline from low-end customers, a slight decline with middle-income customers, and an increase among high-income customers.
A challenging y/y comparison reflects last year’s “revenge buying” with heightened purchases of alcohol, dessert, and appetizers. Cheesecake’s 2Q pricing was up +10.5%, mix was down -5.4%, and traffic was also down -3.7%.
Applebee’s indicated that the pandemic reopening boom of 2022 may now be returning to historically normal & more sustainable levels.
Denny’s reported that while the consumer remains resilient, lower-income consumers continue to struggle, especially given the gas price hike over the last couple of weeks. Notably, a decline in tourism is driving sales challenges at restaurants located in travel centers.
BJ’s restaurant-level margins reached its highest level since covid, with better-than-expected COGS & labor margins.
While management reports strong demand with consumers trading down into Texas Roadhouse, new customers are selecting value items, driving alcohol & entrée mix declines.