Operators pessimistic on sales, economy

Although restaurant operators reported positive same-store sales and traffic in August, the outlook for sales growth and the economy remained soft, according to the National Restaurant Association’s Restaurant Performance Index.

The RPI, a monthly composite that tracks the health of and outlook for the restaurant industry, fell to 100.5 in August, a decline of 0.2 percent from 100.7 in July. This markes the third consecutive month of declines for the index.

“The August decline in the RPI was due almost entirely to a dip in the expectations indicators, with restaurant operators becoming less bullish about sales growth and the economy in the months ahead,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. “In contrast, operators reported positive same-store sales and customer traffic levels in August."

The NRA’s Restaurant Performance Index consists of two components: the Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures; and the Expectations Index, which measures operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions.

The Current Situation Index was 100.7 in August, a 0.6-percent rise from July, marking the first increase in three months. In addition, the Current Situation Index remained above 100 for the fifth consecutive month, which signifies expansion in current situation indicators, the NRA said.

According to the RPI, the majority of restaurant operators reported positive same-store sales in August, with an overall improvement over July’s performance. Fifty-three percent of operators reported a same-store sales gain between August 2012 and August 2013, an increase from the 44 percent who reported higher sales in July and the 52 percent who posted sales gains in June.

In comparison, 33 percent of operators saw a decline in same-store sales in August, a decrease from 36 percent in July.

The Expectations Index was 100.4 in August, a drop of 0.9 percent from July and the lowest level in eight months. And while the Expectations Index remained above 100, which continues to suggest that operators are generally positive about business conditions, that optimism has been dampened compared with recent months, the NRA said.

Thirty-six percent of operators expect to see higher sales in six months, compared with the same period last year, a slight decrease from 37 percent in July and the lowest level in 10 months. Meanwhile, 16 percent of operators expect their sales volume in six months to be lower than it was during the same period last year, a rise from 9 percent in July and the highest level in seven months.

Operators were also less bullish about the economy, the index found. Twenty-three percent said they expect economic conditions to improve in six months, which was unchanged from July. However, 22 percent of operators said they expect economic conditions to worsen in the next six months, a rise from 18 percent in July and the highest level in eight months.

The Restaurant Performance Index is based on the responses to the NRA’s monthly Restaurant Industry Tracking Survey.

Contact Charlie Duerr at [email protected].