Slow Tax Refunds Blamed for Taking Bite Out of Restaurant SalesBy
Jack in the Box CEO saw sales turn negative this month
Cracker Barrel says consumers are ‘anxious’ about refunds
While death and taxes may be a certainty, how quickly Americans are getting their refunds remains up in the air -- and that’s taking a toll on restaurants’ revenue.
Jack in the Box Inc. saw sales abruptly turn negative this month, and the slowdown may be partly due to delayed income tax refunds, Chief Executive Officer Lenny Comma said Wednesday. Cracker Barrel Old Country Store Inc. and Red Robin Gourmet Burgers Inc. also have cited anxiety over the rebates for weak demand.
The worries stem from legislation passed in 2015 that was aimed at preventing fraud but which also may postpone funds remitted to 25 million to 30 million U.S. households this year. All told, the income tax delay may crimp consumer spending by as much as $21 billion in February, Goldman Sachs Group Inc. said earlier this month.
“They all seem to be anxious about different things, whether it is increasing health-care cost, the potential for increasing health-care cost, the timing of tax refunds, the size of the tax refunds,” Cracker Barrel CEO Sandra Cochran said on a conference call Tuesday after the chain lowered its sales guidance for the year.
At Jack in the Box, same-store sales may fall as much as 2 percent in the current quarter, while sales at its Qdoba chain may drop as much as 3 percent. The forecast sent the company’s shares down as much as 10 percent to $93.04 on Thursday.
Red Robin also has struggled to attract customers lately, and is advertising discounted fare like $6.99 burgers, along with lower-calorie options. Same-store sales plummeted 4.3 percent in the most recent quarter.
“February has certainly been challenging for the industry,” Chief Financial Officer Guy Constant said earlier this week. “The lateness of the income tax refund has certainly had a contributing impact to that.”