The chain restaurant industry hasn’t experienced same-store sales growth in more than a year — and it doesn’t look like things are going to change any time soon.
In the first quarter of 2017, same-store sales fell 1.1% across the chain restaurant industry, with same-store traffic dropping 3.4%, according to data from TDn2K’s Restaurant Industry Snapshot.
In the last year, the companies operating chains such as Logan’s Roadhouse and Souplantation have filed for bankruptcy. Bloomberg reported last week that Ignite Restaurant Group — which runs Joe’s Crab Shack and Brick House Tavern — is considering doing the same.
The industry’s slumping sales at first seems befuddling. Consumer confidence has generally increased in recent months, which typically means people are willing to spend more. So, why are restaurants struggling to attract customers?
The problem, according to experts, is that the US is over-packed with options.
“We believe there is an over-supply of restaurants out there,” Victor Fernandez, TDn2K’s executive director of insights, told Business Insider.
Since 2008, same-store traffic across chain restaurants has dropped 14.8%, according to TDn2K’s data. Now, that’s impacting sales. In the first quarter of 2017, only one third of chains posted comparable sales growth, according to Fernandez. In the first quarter of last year, half of chains reported growth.
Concerns that there are simply too many places to eat out for chain restaurants to succeed have swept the industry. Executives at both Starbucks and Darden, Olive Garden’s parent company, have said that the US is “over-retailed.”
Yet, chains “keep on adding restaurants,” Fernandez says….