AUGUST 31-SEPTEMBER 9: RESTAURANT SALES SPIKE OVER LABOR DAY WEEKEND
Index at a Glance
- All Avero Index: sales up 6%, open units up 2%
- Midwest: sales up 7%, open units up 1%
- Northeast: sales up 2%, open units up 3%
- South: sales up 11%, open units up 2%
- West: sales up 9%, open units up 2%
Nationwide Restaurant Performance
We’re happy to report a significant jump in restaurant sales last week which included Labor Day weekend. The All Avero Index shows a 6% increase in sales, with a 2% increase in the number of open units.
This marks the largest increase in restaurant sales since mid-June when we also reported a 6% increase in sales across the US. That week in June, there was also an 11% increase in the number of open units. The data from June suggests that recent restaurant reopenings during the same period contributed to the rise in overall restaurant sales. In other words, the 6% sales increase was spread across 11% more restaurants.
Last week however, the 6% sales increase was only shared by 2% more restaurants, suggesting that each restaurant saw a sizable increase in sales last week.
Regional Restaurant Performance
We also saw big improvements in restaurant sales in each region of the US. In the Midwest, sales were up 7% with only a 1% increase in the number of reopened restaurants. Sales grew by 11% in this region in mid-June, by contrast.
In the Northeast, sales only grew by 2%. The number of open units grew by 3%. That number may seem small. But to put it in context, the number of open units in the Northeast only grew 1% in the entire month of August. Since late June, open units have only grown by 5%. To see a 3% jump in one week is definitely a cause for celebration.
The Southern region wins this week coming in with a whopping 11% sales increase. Keeping with this week’s trend, this is also the biggest increase this region has seen since mid-June. Whereas the sales increase in June was accompanied by an 9% increase in the number of open units, this week open units only rose by 2%.
The sales increase in the West takes second place, coming in 9% higher than last week. Sales in June grew by 11% in the West, accompanied by 6% increase in open units. This week’s sales increase is accompanied by only 2% more open units this week.
Restaurant sales and the number of new coronavirus cases have trended in the same direction the past several months. In areas where we see stronger restaurant sales, we usually see a rise in Covid-19 cases in the following weeks.
Dr. Anthony Fauci, the nation’s top infectious-disease specialist, has warned of a spike in cases following the Labor Day weekend. His prediction includes a specific warning for six states in the Midwest and Missouri.
Dr. Fauci based his warning on the precedent set by the rate of new cases that followed the holiday weekends of Memorial Day and Fourth of July. Additionally, the Sturgis motorcycle event in South Dakota that drew over 460,000 people in August has already led to at least 204 cases in 20 states, with some predicting hundreds of thousands more to come.
Labor Day weekend also marks the end of summer for many school districts across the country. With students returning to school this week, and colder temperatures on the horizon, it’s unlikely that Covid-19 cases will fall in the coming weeks.
Luckily, restaurants in most areas of the country still have several weeks of patio-friendly weather to help keep restaurant sales growing.
September 7-13: Restaurant sales fall sharply after Labor Day
Index at a Glance
- All Avero Index: Sales down 7%, no change in open units
- Midwest: Sales down 11%, 1% decrease in open units
- Northeast: Sales down 2%, 1% increase in open units
- South: Sales down 11%, no change in open units
- West: Sales down 7%, 1% decrease in open units
Nationwide Restaurant Performance
Last week we reported significant growth in national restaurant sales thanks to a boost over Labor Day weekend. Sadly, this week’s index analysis of national restaurant sales shows a return to pre-Labor Day levels—or worse in some regions.
The All Avero Index shows a 7% dip in sales last week, putting us 1% below sales prior to Labor Day. Looking at year over year (YoY) data, national restaurant sales are still 36% lower than they were in September 2019.
On a brighter note, there was no change in the number of open units on the All Avero Index.
Regional Restaurant Performance
The Midwest region saw a sales dip of 11% last week. That puts them four points lower than they were going into the Labor Day holiday. The number of open units only fell by 1% in the Midwest.
The Northeast region held up well overall, basically breaking even. Though sales were down 2% last week, the decline matches the increase they experienced over Labor Day. Plus, the Northeast managed a 1% increase in the number of open units—the only region to gain additional restaurant openings last week.
The Western region also experienced a decrease in sales last week. But the 7% dip follows the 9% increase they saw over Labor Day. That means that unlike any other region, the West held onto 2% of the holiday sales increase. They had no change in the number of open units.
The Southern region also exchanged their 11% Labor Day sales increase for an 11% sales decrease last week. There was no change to the number of open units.
Looking over the gains in the All Avero Index over the past several months, June was by far, the most positive month in terms of restaurant revenue recovery.
Since this spring the AAI gained roughly:
- 1% in April
- 7% in May
- 16% in June
- 4% in July
- 5% in August
Two weeks into September, we’re only seeing 1% higher sales than we saw in late August. A survey of restaurant operators by the National Restaurant Association conducted between August 26-September 1 reveals a negative outlook on what is to come based on the slowdown in July and August. Sadly, 43% of full-service restaurant operators say it’s unlikely their restaurant will still be in business in six months if conditions continue at current levels.
On a brighter note, many states are increasing capacity for indoor dining including Pennsylvania, New Jersey, and many counties in California. Here in New York, indoor dining is set to return at the end of the month for the first time since the shutdown. Governor Cuomo will allow up to 25% capacity seating indoor beginning September 30th. Barring a resurgence of Covid-19, additional seating capacity should help keep restaurant sales on an upward trend heading into fall.
September 14-20: Restaurant sales increase slightly nationwide
Index at a Glance
- All Avero Index: Sales up 2%, 1% increase in open units
- Midwest: Sales up 4%, 1% increase in open units
- Northeast: Sales up 2%, 1% increase in open units
- South: Sales down 1%, no change in open units
- West: Sales up 2%, 1% increase in open units
Nationwide Restaurant Performance
National restaurant sales rose across most of the nation last week. The All Avero Index shows a 2% increase in sales with a 1% increase in the number of open units.
The increase put sales one percent higher than they were going into the Labor Day weekend at the beginning of the month. As we reported last week, sales grew over the Labor Day holiday, then fell again sharply the week following. This increase demonstrates a return to the ongoing slow-but-sure recovery we’ve seen over the summer.
Regional Restaurant Performance
The Midwest region had the strongest restaurant performance last week. Sales increased 4% overall and reopened units grew by 1%. Restaurant closures in the region peaked Mid-April, with 72% of units closed. Currently, the Index shows only 23% of restaurants in the region remain closed—far less than any other region. The Northeast region also had decent restaurant performance last week coming in with a 2% increase in sales and a 1% increase in open units. Inside dining has yet to reopen in New York City but we expect to see the percentage of open units grow after September 30th. Currently the Northeast has 39% fewer open restaurants than usual in a YoY comparison.
The South was the only region that did not enjoy a restaurant sales increase last week. Unfortunately, sales fell 1% in the South. There was no change in the number of open units.
The lack of sales growth in the South can likely be attributed to hurricane activity in the region. Slow-moving Hurricane Sally, which made landfall in Gulf Shores, Alabama on September 16, delivered over 18 inches of rain and catastrophic flooding to parts of the north-central Gulf Coast. The storm moved over the Florida Panhandle, southeastern Alabama, and central Georgia.
Between Hurricane Sally, and multiple other hurricanes and tropical storms in the Atlantic, it has been a wet and stormy September in the South. 2020 is already setting records for a particularly active hurricane season, with more to come.
The Western region fared better with a 2% increase in sales and a 1% increase in the number of open units. Rain along the West Coast is helping with the wildfire problem we reported on last week. Though neither rain, nor smoke and fire are conducive to outdoor dining, which remains the primary mode for in-person dining in the West.
That’s all for this week’s Avero Index. Stay tuned for more updates next week.
September 21-27: National Restaurant Sales Growth Continues Slow Climb
Index at a Glance
- All Avero Index: Sales up 1%, no change in open units
- Midwest: Sales up 1%, 1% decrease in open units
- Northeast: Sales up 1%, 1% increase in open units
- South: Sales up 1%, no change in open units
- West: Sales up 2%, 1% increase in open units
Nationwide Restaurant Performance
National restaurant sales grew 1% last week and there was no change to the number of open units. Though it may be small, any increase in sales is good news. Particularly in light of the fact that patio season has officially peaked and is now on the decline.
Many states have recently increased indoor dining limitations. New York City reopens indoor dining at 25% of capacity for the first time in six months today. Whether restaurants can afford to operate at that limited capacity, and whether New Yorkers will be willing to dine indoors remains to be seen. But hope springs eternal.
Regional Restaurant Performance
Restaurant sales rose slightly in every region of the US last week. Each region experienced at least 1% sales growth. The West was the only region to have more growth, coming in 2% higher than last week.
Changes to the percentage of open units were a bit more diverse by region. The only decrease in the number of open units was in the Midwest, where open units fell 1%. In the South, there was no change to the number of open units. The West and Northeast both saw open units grow by 1%.
It will be interesting to see how the numbers change next week following widespread dining capacity increases taking effect across multiple regions. Are capacity restrictions to blame for lagging restaurant sales growth? Or are customers still leery of returning to restaurants? Will indoor dining increases make up for a decrease in outdoor dining as the nation starts to see cooler fall temperatures? Stay tuned to the Avero Index and we’ll let you know!
