Fw: NEWS: Restaurant Industry Outlook Remained Uncertain as RestaurantPerformance Index Declined in September for Second Consecutive Month

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From: Nat'l Restaurant Assn Media <media@restaurant.org>

Date: Fri, 30 Oct 2009 09:07:17 -0500

To: Nat'l Restaurant Assn Media<media@restaurant.org>

Subject: NEWS: Restaurant Industry Outlook Remained Uncertain as Restaurant Performance Index Declined in September for Second Consecutive Month

FOR IMMEDIATE RELEASE, October 30, 2009

CONTACT: Mike Donohue (202) 331-5902 mdonohue@restaurant.org, or Annika Stensson (202) 973-3677 astensson@restaurant.org or on Twitter 

Restaurant Industry Outlook Remained Uncertain as Restaurant Performance Index Declined in September for Second Consecutive Month
Operators continued to report sales and traffic declines; Less optimistic about sales growth

 

(Washington, D.C.)  Restaurant industry performance remained soft in September, 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 97.5 in September, down 0.4 percent from August and its 23rd consecutive month below 100.

"While there were signs in recent months that the short-term outlook may be improving, the latest figures indicate that the restaurant industry's recovery has yet to fully gain traction," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association.  "Restaurant operators continued to report declines in same-store sales and customer traffic in September, 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 96.0 in September – unchanged from August and tied for the second-lowest level on record.  In addition, September represented the 25th consecutive month below 100, which signifies contraction in the current situation indicators. 

Although restaurant operators continued to report negative same-store sales in September, the performance was an improvement over the record-low reading posted in August.  Twenty-two percent of restaurant operators reported a same-store sales gain between September 2008 and September 2009, up from just 17 percent who reported a sales gain in August.  Sixty-five percent of operators reported a same-store sales decline in September, down slightly from 68 who reported negative sales in August.   

Customer traffic results also improved slightly in September, despite remaining negative for the 25th consecutive month.  Twenty percent of restaurant operators reported an increase in customer traffic between September 2008 and September 2009, up from 15 percent who reported higher traffic in August.  Sixty-two percent of operators reported a traffic decline in September, down from 65 percent who reported lower traffic in August.

With soft sales and traffic levels persisting, capital spending activity dropped off somewhat in recent months.  Thirty-seven percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the lowest reading in six months.

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 September – down 0.9 percent from August and its first decline in three months.   

The September decline in the Expectations Index was due in part to restaurant operators' dampened outlook for sales growth in the months ahead.  Just 25 percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 32 percent who reported similarly last month.  In comparison, 32 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, up slightly from 30 percent who reported similarly last month.

Despite the softer sales outlook, restaurant operators remained cautiously optimistic about the direction of the economy.  Twenty-eight percent of restaurant operators said they expect economic conditions to improve in six months, while 20 percent expect economic conditions to worsen during the next six months.  Last month, 34 percent of operators said they expected the economy to improve in six months, while 19 percent expected conditions to deteriorate. 

The outlook for capital spending fell considerably from recent months.  Thirty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down sharply from 45 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 (www.restaurant.org/trendmapper), the Association's subscription-based service that provides detailed analysis of restaurant industry trends.

 

National Restaurant Association's Restaurant Performance Index
Values Greater than 100 = Expansion; Values Less than 100 = Contraction

Source: National Restaurant Association

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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.  
 
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