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|Monday, August 03, 2009||09:10|
(Drinks Media Wire). Performance Index Declined for Second Consecutive Month
Operators continued to report sales and traffic declines; Less optimistic about sales growth
The restaurant industry’s economic challenges continued to persist in June, as the National Restaurant Association’s comprehensive index of restaurant activity declined for the second consecutive month. The Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 97.8 in June, down 0.5 percent from May and its 20th consecutive month below 100.
“While there are signs that suggest an improvement may be on the horizon, the latest figures indicate that the restaurant industry’s recovery has yet to gain a firm foothold,” said Hudson Riehle, senior vice president of Research and Information Services for the Association. “Restaurant operators continued to report declines in same-store sales and customer traffic in June, and their outlook for sales growth in the months ahead remains mixed.”
The RPI is based on the responses to the National Restaurant Association’s Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. The RPI consists of two components – the Current Situation Index and the Expectations Index. The full report is available online.
The RPI is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators.
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 96.6 in June – down 0.3 percent from May and its lowest level in three months. In addition, June represented the 22nd consecutive month below 100, which signifies contraction in the current situation indicators.
Restaurant operators continue to report soft same-store sales, with June representing the 13th consecutive month of sales declines. Only 22 percent of restaurant operators reported a same-store sales gain between June 2008 and June 2009, down from 26 percent who reported a sales gain in May and the lowest reading in the seven-year history of the RPI. Sixty-one percent of operators reported a same-store sales decline in June, up slightly from 60 who reported negative sales in May.
Restaurant operators also reported negative customer traffic levels in June, marking the 22nd consecutive month of traffic declines. Nineteen percent of restaurant operators reported an increase in customer traffic between June 2008 and June 2009, down from 22 percent who reported similarly in May. Sixty percent of operators reported a traffic decline in June, compared to 59 percent reported lower traffic in May.
Although sales and traffic levels softened in recent months, capital spending activity remained relatively steady. Forty-two percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, compared to 41 percent who reported similarly last month.
The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 99.0 in June – down 0.7 percent from May and its second consecutive decline after rising to a 19-month high in April.
The recent decline in the Expectations Index was largely due to restaurant operators’ dampened outlook for sales growth in the months ahead. Twenty-four percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 29 percent last month. In comparison, 33 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, matching the proportion who reported similarly last month.
Restaurant operators are also less optimistic about the economy, compared to recent months. Twenty-six percent of restaurant operators said they expect economic conditions to improve in six months, down from 34 percent who reported similarly last month. Meanwhile, 26 percent of operators expect economic conditions to worsen in six months, up from 17 percent who reported similarly last month.
Restaurant operators reported a slight uptick in plans for capital expenditures in the months ahead. Forty-four percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 41 percent who reported similarly last month.
The RPI is released on the last business day of each month, and more detailed data and analysis can be found on Restaurant TrendMapper, the Association's subscription-based service that provides detailed analysis of restaurant industry trends. Follow Restaurant TrendMapper on Twitter @trendmapper.
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which is comprised of 945,000 restaurant and foodservice outlets and a workforce of 13 million employees. Together with the National Restaurant Association Educational Foundation, the Association works to lead America’s restaurant industry into a new era of prosperity, prominence, and participation, enhancing the quality of life for all we serve. For more information, visit our Web site at www.restaurant.org.
|Company: National Restaurant Association|
|Address: 1200 17th St., NW - 20036 Washington DC|
|Country: UNITED STATES|
|Phone: +1 (202)-973-3677|
|Fax: +1 (202)-973-3961|