Q1 2018 Industry Commentary

Same-Store Sales Discussion

During the first quarter of 2018 (“Q1 2018”), restaurant industry same-store sales (“SSS”) increased for the second consecutive quarter following six straight quarters of SSS declines. The increase was modest and equaled the Q4 2017 increase of 0.2%. Of the 59 companies we follow, 37, or 63%, generated SSS growth – the highest percentage positive since 70% were positive in Q4 2016.

As shown in the figure below, longer term performance has been most consistent in QSR measured over 3, 5 and 10 year periods. Fast casual provided the most growth over the past 10 years, but most of that growth occurred more than five years ago. Casual dining has suffered the most, with minimal SSS growth for all time periods over the past 10 years, as diners started flocking to fast casual restaurants.

QSR: The QSR segment continued to lead the industry with 14 of the 21 concepts we track turning in SSS growth for an average of 1.1% year-over-year (“YOY”) growth, a continuation
of the steady climb. Mexican concepts again led the segment with 2.4% growth. Domino’s had the highest SSS growth within the segment with an 8.3% increase YOY. McDonald’s
performance slowed slightly compared to Q4 2017, yet still posted 2.9% growth YOY…

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