Sales, traffic declines dampen operator outlook

A decline in sales and traffic for the second consecutive month diminished restaurant operators’ enthusiasm about the economy, 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 100.7 in July, a decline of 0.6 percent from June’s 101.3.

Even with the decline, however, July marked the fifth consecutive month the RPI has stood above the 100 mark, signifying expansion in key industry indicators.

“The RPI’s July decline was the result of pullbacks in both the current situation and expectations indicators,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. “Most notably, restaurant operators’ outlook for the economy fell to a five-month low, with only 23 percent of operators expecting business conditions to improve in the next six months.”

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 100.1 in July, reflecting a decline of 0.6 from June’s level of 100.7, the second consecutive monthly decrease. Even with the decline, however, the Current Situation Index remained above 100 for the fourth consecutive month, the NRA said.

According to the RPI, 44 percent of foodservice operators booked same-store sales gains between July 2012 and July 2013, down from 52 percent who reported better sales in June and 63 percent who posted sales gains in May.

Meanwhile, 36 percent of restaurateurs said same-store sales decreased in July, up from 34 percent in June.

The Expectations Index was 101.3 in July, a decline of 0.6 percent from June, marking the lowest level in seven months. However, even with the decline the NRA found that each of the four expectations indicators remained above 100 for the seventh consecutive month, which tends to reflect a generally upbeat mood among operators concerning future business conditions.

The NRA said 37 percent of operators believe they will see higher sales in six months, compared with the same period in the previous year. That reflects a decline from 46 percent who reported similarly in June. At the same time, 9 percent of restaurateurs anticipate that their sales volume will be lower in six months than they were during the same period in the previous year. Last month 11 percent of operators said they felt that way.

Operators also tended to be more downbeat about future economic conditions. Twenty-three percent expect that economic conditions will improve in six months, down from 30 percent who reported similarly in June. Meanwhile, 18 percent said economic conditions will deteriorate in the next six months, up from 16 percent in June.

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

Contact Paul Frumkin at [email protected].
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