Operator pessimism concerning sales growth and the economy deflated the National Restaurant Association’s Restaurant Performance Index in October, driving it to its lowest level in more than a year.
The RPI, a monthly composite that tracks the health of and outlook for the foodservice industry, fell 0.9 percent in September, to 99.5 in October.
This marks the first time in 14 months the index has fallen below the 100 mark, which reflects a contraction in the NRA’s index of key industry indicators.
“Although restaurant operators overall continued to report positive same-store sales in October, their short-term outlook for sales growth and the economy is decidedly more pessimistic,” said Hudson Riehle, the NRA’s senior vice president of its Research and Knowledge Group. “Nearly two out of five restaurant operators expect business conditions to worsen in the next six months, which is double the proportion that expect conditions to improve.”
The RPI consists of two components: the Current Situation Index, which measures current trends in the same-store sales, traffic, labor and capital expenditures; and the Expectations Index, which gauges restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions.
The Current Situation Index in October slipped 0.6 percent from 99.9 in September to 99.3. Although the NRA said same-store sales stayed in positive territory in October, decreases in the labor and customer traffic indicators offset the performance. As a result, the Current Situation Index remained below the 100 mark for the third time in the last four months.
And despite the fact that foodservice operators reported same-store sales were positive for the 17th consecutive month in October, results continued their downward trend. NRA research revealed that 40 percent of operators said same-store sales rose between October 2011 and October 2012, a decrease from the 48 percent in September who reported higher same-store sales and the lowest result in 17months.
By comparison, 36 percent of participants said same-store sales declined in October, down marginally from 35 percent in September.
Customer traffic fell in October, the NRA said. Thirty percent of operators reported higher traffic levels between October 2011 and October 2012, a decline from 36 percent who reported an increase in September. Meanwhile, 41 percent of participating restaurateurs said customer counts dipped in October, unchanged from September.
Restaurateurs also reported a slight dip in capital spending.
The Expectations Index fell 1.2 percent to 99.7 in October. That result marks the first time in 14 months the Expectations Index slipped below 100, providing a rather downbeat six-month outlook for the four industry indicators, the NRA said.
The RPI is based on the responses to the NRA’s monthly tracking survey.