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NRA: Sales improve in July, but expectations diminish

NRA: Sales improve in July, but expectations diminish

Restaurant Performance Index rises for first time in three months

Nearly three quarters of restaurant operators said their sales improved in July, according to the latest Restaurant Performance Index from the National Restaurant Association, released Monday.

But operators’ expectations for sales in the coming months diminished for the fourth straight month.

Still, due to those sales numbers, the NRA’s RPI rose 0.7 percent, to 102.7, in July, the first increase in the index in three months and the 29th straight month of expansion. The index measures operators’ current situation and their expectations for coming months.

The RPI is a composite index measuring the strength of the restaurant industry. Any measure above 100 indicates the industry is in expansion mode.

“July’s RPI gain was fueled primarily by an improvement in the current situation indicators,” said Hudson Riehle, senior vice president of the NRA’s research and information services division.

The RPI is comprised of two indices: A Current Situation Index that measures current sales and capital spending, and an Expectations Index that measures operators’ outlook.

According to the NRA’s survey, 73 percent of operators said their same-store sales increased in July — an increase from 64 percent in June, while just 16 percent of operators reported a decline.

Likewise, 59 percent of operators said traffic increased in the month, compared with 47 percent in June. Twenty-three percent said traffic fell, from 28 percent the previous month.

As a result, the Current Situation Index was 103.7 in July, rising 1.2 percent from June and the strongest increase since December.

While operators’ performance was strong in July, their outlook for the coming months was negative.

According to the survey, 40 percent of operators expect sales to be higher in six months, the fourth straight month of declining optimism. Meanwhile, 12 percent expect their sales to be lower in six months, the highest level in a year.

Meanwhile, only 16 percent of operators expect overall economic conditions to improve in six months, while 21 percent expect it to worsen. That was the second straight month in which operators had a negative outlook.

Despite the declining optimism, the NRA’s Expectations Index was 101.7, a slight increase from 101.5 in June. Perhaps one reason for the increase: Most operators are still planning to build.

Sixty-six percent of operators plan to spend on equipment or expansion in the coming months, compared with 59 percent in June.

The RPI is based on responses from the NRA’s monthly Restaurant Industry Tracking Survey.

Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze

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