In our quarterly earnings overview series for restaurant stocks—like Yum! Brands (YUM), Bloomin’ Brands (BLMN), Chipotle Mexican Grill (CMG), Brinker International (EAT), and the Consumer Discretionary Select Sector SPDR (XLY)—we’ve learned that same-store sales are one of the most important revenue drivers for a restaurant.
Same-store sales help determine the growth in sales from the existing location. The National Restaurant Association’s (or NRA) monthly survey is spread over more than 400 restaurant operators. The chart below shows the same-store sales’ current health. It also shows expectations for same-store sales.
The NRA’s current index for same-store sales was at 104 as of August 2014—compared to 102.1 for the same period in 2013.
According to the NRA, 62% of the operators reported a gain in same-store sales over this period. 21% of the operators reported a decline. Current same-store sales have been at levels above 100 since March 2013. This demonstrates an expansion over 18 consecutive months.
The restaurant operators’ six-month outlook is reflected in the Expectations Index. It was at 104. Same-store sales’ expectations have been at levels above 100 for 59 consecutive months.
According to the NRA, 45% of operators have a positive expectation about same-store sales for the next six months. This is down from 47%—compared to July 2014. 5% of operators expect same-store sales to decline—compared to 13% in July 2014.
Higher expectations are a catalyst for initiatives—like increasing capital expenditures to open new restaurants. We’ll discuss this in the next part of the series.