The latest monthly restaurant performance tracking survey conducted by the National Restaurant Association confirms that the restaurant business is in the midst of probably its worst contraction ever, the Feb. 3 CME Group Daily Livestock Report says. The poll involves about 500 or so restaurant operators regarding same-store sales performance, customer traffic, expectations for future sales, and other issues related to employment and capital expenditures.
The latest survey results show that, while sales lag across all restaurant concepts, the fine-dining and family-dining segments have been hit particularly hard. In fact, only 8% of operators in the fine-dining concept reported higher sales than the previous year. Family dining was slightly better but generally sales were down overwhelmingly in this segment also.
Meanwhile, sales at limited-service restaurants, or quick-service restaurants (QSR), were much better in comparison, with 49% of respondents reporting lower sales compared to a year ago and 46% reporting increased sales. This fits with generally positive results reported from large publicly traded QSR companies, such as McDonalds, the report says.
These results signal significant implications for the livestock industry. With high-value cuts in less demand, light choice ribeye prices closed on Tuesday afternoon (USDA quote) at just $4.2476/lb., 20% off year-ago levels and 15% lower than the 2004-08 average. Prices for other high-priced cuts are also down sharply.
“The better performance of the QSR concept should provide a boost to demand for grinding beef raw materials and prices for beef trimmings are steady to higher compared to year-ago levels. The problem that the industry also faces is the general decline in foot traffic, which will tend to negatively reduce beef volumes flowing through the system. Yes, cattle numbers are down but fewer customers eventually mean fewer restaurants and a real decline in U.S. aggregate beef demand.”