Restaurant sales gain ground in March as consumers' tax refunds roll in

• Baird's survey of private restaurants suggests that March sales were slightly better than those in February, January and the fourth quarter of 2017.
• The higher sales are partially the result of consumers receiving their tax refunds.
• Baird analyst David Tarantino said he expects sales across the industry to continue to accelerate as weather issues fade.

A waitress delivers sushi orders at Masa Hibachi Steakhouse & Sushi in Silver Spring, Maryland.

Bill O'Leary | The Washington Post | Getty Images

Things could be looking up for the restaurant industry, especially for fast food chains.

Despite higher-than-average snowfall and lower temperatures, sales at restaurants in March could show the second-highest monthly same-store sales gain of the past two years, according to Baird's David Tarantino.

"We believe this acceleration at least partly reflects the timing of tax refunds," he wrote in a research note Monday.

Tarantino said that a recent survey of private restaurants suggested that March sales were slightly better than those in February, January and the fourth quarter of 2017. However, less than half of the firm's typical survey sample has been collected so far.

"We believe chains that cater to lower-income consumers will see greater marginal demand improvement from individual income tax cuts than concepts catering to higher-income customers," Tarantino wrote.

He noted that Dunkin' Donuts, McDonald's, Texas Roadhouse and Jack in the Box, fit this profile.

Tarantino said he expects sales across the industry to continue to accelerate as weather issues dissipate and more consumers take advantage of their tax cuts and returns.

"We are optimistic about the outlook for restaurant stocks for the balance of 2018," he wrote.