Chain restau­rants un­der pres­sure

Daily Freeman (Kingston, NY) - - BUSINESS -

Pres­sure from in­creased com­pe­ti­tion and lower gro­cery prices will likely keep squeez­ing sales at chain restau­rants.

The in­dus­try has been deal­ing with a slew of eco­nomic fac­tors that are per­sis­tently drag­ging down same-store sales and con­tribut­ing to mainly lack­lus­ter fi­nan­cial re­sults. Gro­cery prices re­main low, so con­sumers on tight bud­gets are of­ten for­go­ing the ex­pense of eat­ing out. In­creased com­pe­ti­tion and ris­ing la­bor costs are also pres­sur­ing mar­gins at chain restau­rants.

In its lat­est quar­ter Dar­den re­ported that its Olive Gar­den restau­rants had a boost in sales, help­ing prompt a more up­beat out­look for the year. But that boost was driven by higher prices, while cus­tomer traf­fic slipped.

“Since the be­gin­ning of 2015, same-store traf­fic growth has trended down at an in­creas­ing rate,” said Vic­tor Fer­nan­dez, di­rec­tor of In­sight and Knowl­edge for TDn2K, which tracks restau­rant in­dus­try trends and data.

The com­pany said the in­dus­try was hav­ing its worst year since the end of the re­ces­sion, with ca­sual din­ing – par­tic­u­larly the bar-and-grill por­tion of that seg­ment – fac­ing con­sid­er­able strug­gles.

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