Restaurant Sales Volatility Increases in Winter Months

As we flip our calendars to November and Mother Nature begins to flip the weather script, it is a good reminder for quick service, fast casual, and other restaurant chains that the conditions outside will begin to have a greater effect on consumers and therefore, traffic trends and sales.  Weather Sensitivity, a metric Planalytics calculates to identify the portion of sales directly attributable to changes in the weather, peaks in December and November at over 5% nationally. This is twice as much weather-based sales volatility than is seen during the summer and fall periods. On a market-by-market basis, we often see even larger impacts.

Looking back to last winter, we can see how the conditions – either unfavorable or favorable – translate into Weather-Driven Demand (WDD) decreases or increases in restaurant transactions. WDD isolates the weather’s influence and quantifies it as a percentage, volume, or dollar impact for a business.

• DECEMBER 2022: The month ending up being the coldest for the U.S. since 2017 with plenty of rain, snow, and wintry storms. Extreme, below zero cold arrived mid-month in many markets and extended until the Christmas holiday. The frigid conditions kept more people at home and had a negative impact on transactions.

EXAMPLE: For the week ending 12/24, WDDs for total transactions vs. normal (what transactions would be based on average weather for the week) were down significantly in many markets including Minneapolis -25%, Chicago -19%, San Antonio -17%, Indianapolis -15%, Houston -14%, Charlotte -13% and Atlanta -10%.

• JANUARY 2023: The new year brought a sharp turnaround in temperatures compared to the freeze leading up to Christmas. Above normal warmth was recorded for a large portion of the country and the Northeast logged its warmest January in over 50 years. Milder conditions and a lack of traffic-limiting weather events supported higher levels of consumer activity.

EXAMPLE: For the week ending 1/7, WDDs compared to normal spiked across several locations including Buffalo +30%, Chicago +13%, Baltimore +12%, Little Rock +12% and Nashville +11%.

These are big swings that impact comp sales results as well as the specific labor and inventory needs of individual locations. Leveraging weather-driven demand analytics helps restaurant businesses more effectively evaluate performance and proactively manage it by optimizing resources from staffing to digital marketing.

The above industry-level WDDs from Planalytics provide a general indication of the impacts, although the chain-specific WDD models used by clients offer more precision and can be developed for various channels (e.g., delivery, dine in, drive-through, etc.) and for specific menu items.