Same-store sales growth
Same-store sales growth, expressed as a percentage, is a measure of the rise in revenues of existing restaurants over a certain period of time.
Same-store sales growth is driven by ticket size and traffic. It’s an important metric for investors to monitor, as it increases a company’s revenues without increasing capital investment, and it’s a direct reflection of how much traffic each location is driving without simply adding more stores.
Higher same-store sales growth also indicates the company’s value proposition in attracting its customers. For 4Q15, the median same-store sales growth for the eight fast casual restaurants under review in this series was 3.3%.
Shake Shack (SHAK), which forms 0.01% of the holdings of the iShares Russell 2000 ETF (IWM), recorded same-store sales growth of 11% in 4Q15, with an increase in traffic contributing 6.2% and ticket growth contributing 4.8%. Limited time offerings, increased brand awareness, and a 3% price rise led to a rise in the company’s same-store sales growth.
SHAK was followed by Zoe’s Kitchen (ZOES) with same-store sales growth of 7.7%. ZOES’s increase in traffic contributed 2.8% toward its same-store sales growth, while a better product mix and increased menu prices contributed 4.5% and 0.4%, respectively.
The E. coli outbreak brought Chipotle Mexican Grill’s (CMG) same-store sales growth down to -14.6% in 4Q15. The fall was largely due to a decrease in traffic, as customers were skeptical about the food being served at CMG’s restaurants. Noodles & Company (NDLS) also recorded negative same-store sales growth of 1.1%.
Habit Grill (HABT) and the Pollo Tropical brand of FRGI recorded same-store sales growth of 0.4% and 2.9%, respectively.