Jack in the Box executives said sales have slowed in recent weeks. | Photo: Shutterstock.
September provided more evidence of a bifurcated economy.
Restaurant sales rose 0.7% in the month, compared with August, according to new federal data released on Tuesday, despite a lower overall rate of spending in the month.
Over the past year, restaurant sales in September are up 6.7% and they are up 5.7% year to date.
But fast-food sales remained relatively weak. Third-quarter fast-food traffic declined 1.1% in the third quarter, according to the data firm Revenue Management Solutions. A 1.9% increase in average check implied a 0.8% increase in sales in the period.
The data suggests that fast-food chains continue to underperform the broader industry, at least.
Lower-income consumers, and particularly younger consumers, have cut back on restaurant visits, which has created headaches for chains like McDonald’s, Jack in the Box, Chipotle and even Sweetgreen.
But higher-end consumers are spending more, which has helped casual-dining and higher-end restaurants. And it may be having an outsized impact on overall sales.
That said, there are continued signs of a consumer that is slowing their rate of spending. Retail sales rose 0.2% last month from August, a slowdown from previous months.
Surveys from the data firm Numerator also suggest a skittish consumer. Just 38% of consumers said they are comfortable spending more on discretionary purchases, according to the firm.
Consumer confidence also declined in October, falling 0.6% to a four-year low. Numerator gets its confidence numbers by compiling an average of how consumers feel about the job market, their household finances and spending comfort levels.
Restaurant chains have been expressing concerns about the state of the low-income consumer for more than two years. And executives have suggested that conditions have worsened since October.
“Like many brands, we’ve recently seen a few weeks of downward pressure tied to the effects of the government shutdown, as well as lapping several weeks of our stronger results from last year,” Jack in the Box CEO Lance Tucker told analysts last week.
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