Restaurant Credit Card Sales Increase, Retail Declines

April 26, 2011 11:00 AM Eastern Daylight Time 

Restaurant Credit Card Sales Increase While Total Main Street Card Sales Decline

February Card Sales Fueled by Valentine’s Day

SCARSDALE, N.Y.--(BUSINESS WIRE)--Capital Access Network, Inc.’s (CAN) Data Services Division reports that the nation’s “Main Street” brick and mortar retailers, service providers and restaurants experienced a 3.09% decline in same store credit and signature debit card sales in Q1 2011 as compared to Q1 2010. The findings were released today in CAN’s Q1 2011 Small Business Credit Sales Report (SBCS Report). The Q1 2011 drop marks the 14^th consecutive quarter of YoY credit and signature debit card sales declines and marks a reversal of a five-quarter trend of moderating YoY declines.

“While Main Street card sales continue to struggle overall, for the first time in 16 quarters, we saw every restaurant ticket size category increase its YoY card sales.”

“Restaurants are a bright spot in the credit sales trends,” stated Glenn Goldman, CAN’s CEO and president. “While Main Street card sales continue to struggle overall, for the first time in 16 quarters, we saw every restaurant ticket size category increase its YoY card sales.” Goldman continued: “Our nation’s eateries were benefited by Valentine’s Day card spending, which increased almost 1% from the 2010 Valentine’s Day period.”

Positive card usage was also found in “A” – risk level businesses, as designated by CAN’s proprietary risk scoring models. “Main Street businesses also continue to hold onto a larger proportion of the available consumer revolving credit,” said Goldman. Despite these pockets of positive card sales, declines were reported in suburban, rural and urban populations, every “Time in Business” category and all eight regions of the country.

A copy of the Q1 2011 SBCS Report can be viewed at: http://www.capitalaccessnetwork.com/sbcsreport.html.

1. Overall, “Main Street” Q1 2011 same store credit and signature debit card sales declined 3.09% from their Q1 2010 levels. This represents the 14^th consecutive quarter of same store YoY card sales declines. In total, Main Street restaurants, retailers and service providers have not seen an increase in YoY card sales since Q3 2007. For the first time in five quarters, the rate of YoY decline also accelerated in Q1 2011, rising to 3.09% from the 2.56% YoY decline experienced in Q4 2010. For each quarter from Q4 2009 through Q1 2011, same store YoY credit sales declines were 12.21%, 9.16%, 5.60%, 5.06%, 2.56% and 3.09%, respectively.

SPOTLIGHT: Main Street businesses are holding onto a greater share of the declining consumer credit card float nationwide. According to the Federal Reserve’s April 7, 2011 G.19 Release (Consumer Credit), revolving consumer debt fell 5.9% in January and a further 4.1% decline is projected for February. At the same time, YoY card sales in January fell only 3.73% and then another 0.33% in February.

2. Main Street restaurants increased YoY card sales 0.81% in Q1 2011, the second consecutive quarter of YoY card sales gains for the nation’s eating places. However, the increase was not enough to offset the non-restaurant (retail, service and other) YoY card sales decline of 6.04% in Q1 2011. Main Street retailers, service providers and other stores have experienced same store YoY declines in card sales for 16 consecutive quarters dating back to Q2 2007.

SPOTLIGHT: Every restaurant category saw increased card spend in Q1 2011 as compared to Q1 2010. “Fine dining” (average tickets greater than $100) reported card sales growth of 0.06% on a YoY basis, followed by restaurants with average ticket sizes less than $25, which saw a 0.46% increase; restaurants with average ticket sizes between $25 and $50, which saw a 0.75% increase; and restaurants with average ticket sizes between $50 and $100, which experienced a 1.54% increase. The last time all categories showed same store YoY increases in card sales was Q2 2007.

3. During the Valentine’s Day period, defined as February 11-15, restaurants showed a YoY card sales increase of 0.99% compared to the 2010 Valentine’s Day period. This uptick helped drive the February restaurant numbers overall. For all restaurants, February 2011 saw same store card sales increase 2.82% compared to the February 2010 levels.

4. Consumers in more rural areas of the country (MSA population less than 100,000) and those in larger urban areas of the country (MSA population 1+ million) are slowing their credit and signature debt purchases more rapidly than their suburban counterparts (MSA populations 100,000-249,000 and 250,000-999,999). In Q1 2011, YoY card sales fell 2.10% and 2.70%, respectively, in areas with populations between 100,000 and 249,999 and those with populations between 250,000 and 999,999. Rural MSAs saw credit sales decline 3.98% and larger urban MSAs declines of 3.50% in Q1 2011 as compared to Q1 2010. This is the third consecutive quarter that both rural and larger urban MSAs have reported larger declines than the other MSA groups.

5. All regions posted card sales declines in Q1 2011 as compared to Q1 2010. Relative credit and signature debit usage continued to be strongest in New England for the fourth straight quarter. New England YoY card sales were essentially flat in Q1 2011, declining only 0.12%. The Rocky Mountain Region and Southeast Region reported the severest YoY card sales declines of 4.01% and 4.22% respectively.

6. All “Time in Business” categories again posted YoY card sales declines in Q1 2011, ranging from a 0.50% decline for Main Street businesses in operation less than five years to a 4.61% decline for businesses in operation 5 to 7 years. This is the first time since Q1 2009 that the newest businesses (less than five years in business) have had YoY same store credit sales figures stronger – on a relative basis – than their more experienced counterparts.

7. Card sales grew for the fourth consecutive quarter among CAN’s “A” businesses (those considered to represent the lowest risk band on an “A”-“D” scale). “A” risk businesses saw card sales increase 2.41% in Q1 2011 from Q1 2010 levels. “B” risk businesses saw Q1 2011 card sales decline 3.04%, “C” risk businesses experienced a 4.52% decline, and “D” risk concerns lost 11.24% of their card sales – in each case compared to Q1 2010 card sales levels.

Sponsored by Capital Access Network, Inc.’s Data Services Division

The Small Business Credit Sales (SBCS) Report is a quarterly report highlighting credit and signature debit card sales trends within small to mid-sized businesses nationwide. Sponsored by the Data Services Division of Capital Access Network, Inc. (CAN), a New York-based financial technology company, the SBCS Report features analysis of credit and debit card sales trends based on same store card sales data housed in CAN’s data warehouses, which retain 12 years of data and include more than 50,000 businesses and the “daily” card sales data collected from more than 80,000 working capital and loan transactions. Most same store sales retail reports focus on or include data from big-box retail and nationwide/regional department stores, either ignoring or obscuring the trends of the majority of small and mid-sized businesses. The SBCS Report was designed to assist business owners, the processing industry, associations, analysts and media interested in tracking and benchmarking credit and debit card sales trends among small and mid-sized businesses. Data published may include:

• Average Same Store Credit Sales - Overall

• Average Same Store Credit Sales - by Population Size

• Average Same Store Credit Sales - by Industry and Ticket Size

• Average Same Store Credit Sales - by Geographic Region

• Average Same Store Credit Sales - by Time in Business

• Average Same Store Credit Sales - by Risk Category

Data Notations

Merchants included in the data sample represented in the SBCS Report are drawn from 97 million+ data records collected from over 50,000 businesses and housed in the databases of CAN’s Data Services Division. These businesses are U.S. based, small to mid-sized and represent approximately 385 Standard Industrial Classification (SIC) codes. All represented businesses accept credit and debit cards as a form of payment. The pool from which the businesses are selected represents up to $78 million in current quarterly processing transactions. The SBCS Report is based on data from businesses with the following characteristics:

• Average Annual Gross Sales of approximately $785,000 (typical range of $98,000 to $4,000,000)

• Average Monthly Processing Volume of approximately $24,000 (typical range of $2,400 to $150,000)

• Average Ticket Size of approximately $150 (typical range of $8 to $1,225)

About Capital Access Network, Inc.

Capital Access Network, Inc. (CAN) leverages leading edge data, systems and technology, combined with a unique and highly effective Daily Remittance Platform ™, to deliver innovative financial products and services geared to small and mid-sized businesses (SMBs) and SMB capital providers. The Financial Technologies Group (FinTech Group) offers SMB lenders, credit card issuers and other capital providers customized platforms and hosted services that enable Daily Remittance-powered financial products, improving underwriting decisioning and delivery, extending customer lifecycles, controlling costs and enhancing portfolio performance. The Data Services Division draws upon the data gathered by CAN’s subsidiaries through more than a decade of collecting and analyzing the sales trends and firmographics of tens of thousands of SMBs. CAN also provides merchant capital options powered by Daily Remittance Platform through its wholly-owned subsidiaries: AdvanceMe, Inc, the leader in Merchant Cash Advances, and NewLogic Business Loans, Inc. Headquartered in New York, CAN and its subsidiaries currently employ 390 people in four locations in New York, Georgia, Massachusetts and Costa Rica. Learn more at www.CapitalAccessNetwork.com.

Contacts

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