What are Same-Store Sales?
Same-store sales measures the increase in revenue over a particular period for the same set of stores in each period.
How Do Same-Store Sales Work?
For example, let's assume that Company XYZ is a restaurant company that has 45 restaurants. It had only 40 restaurants the year before, meaning that the company opened five new stores in the past year.
To calculate the company's year-over-year sales, Company XYZ would look only at the change in revenue for the 40 companies that existed both this year and last year. It would exclude the five new stores from the calculation.
Why Do Same-Store Sales Matter?
Some companies exhibit growth in revenue by opening new stores. Some companies exhibit growth by making more money from the stores they already own. The same-store sales information points out the difference. When a company can achieve revenue growth only from opening new stores, this might indicate that interest from existing customers is waning -- in other words, same-store sales might be down. An increase in same-store sales may indicate that existing customers are coming back more frequently, spending more or bringing other customers.
