Restaurant traffic during Q2 was volatile, moving inversely with the direction of gas prices (prior note here). Independent operators once again outperformed national chains, especially in full-service (+118bps). (Why? Read here.) Full-service independents also outperformed limited-service independents (+137bps). We’ve also seen Black Box data through May (which is all national chains) and it to points to softer traffic in May for QSR. Finally, the table below of Personal Consumption Expenditures shows that spending at full-service remained far more solid during May than limited-service, which weakened MoM in both spend and volume. (Limited-service is more impacted by higher gas prices because it is largely a home meal replacement vs. a special night / occasion.)
Restaurant distributors are favorably levered to the stronger full-service independent category. We see that in the observed activity at the warehouses of each of the majors (SYY, USGC, and CHEF); activity (workers, trucks, etc.) was similar to Q1’s trend despite the gas price shock. As shown in the second chart, while May was a softer period for the distributors, June rebounded assertively. (We are at a loss to explain the observed volatility at CHEF’s; our coverage is low at 33% and so our data may be a misread. We are increasing the coverage.)
