In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy looks back at the trends in restaurant indicators in the 2nd quarter. Business conditions for the restaurant industry are generally improving, and restaurant operators remain optimistic that the environment will improve in the months ahead.
Business conditions were generally positive for the restaurant industry in the 2nd quarter, while restaurant operators remained optimistic that the environment will continue to improve. The following is a look at the performance of some key industry indicators in the 2nd quarter, as well as an outlook for where things may be going in the coming months.
Job Growth Continues to Impress
The restaurant industry continued to be one of the top job creators in the economy during the 2nd quarter. According to the Bureau of Labor Statistics, eating and drinking places added a net 120,600 jobs in the 2nd quarter on a seasonally-adjusted basis, the strongest increase since the 1st quarter of 2006 and the third-largest quarterly gain on record.
In addition, the restaurant industry’s job growth ranked only behind the professional-and-business services sector, which added a net 200,000 jobs in the 2nd quarter.
Looking ahead, restaurant operators are also trending positive in their outlook for staffing levels in the coming months. In the July Tracking Survey, 25 percent of operators said they plan to increase staffing levels in six months (compared to the same period in the previous year), while only 14 percent said they plan to cut positions. The remaining 61 percent of operators said they plan to leave staffing levels unchanged.
Sales Outlook Remains Positive
Overall, restaurant industry sales continued to rise in the 2nd quarter. According to preliminary figures from the U.S. Census Bureau, eating and drinking place sales totaled $137.2 billion in the 2nd quarter on a seasonally-adjusted basis, up from the 1st quarter’s sales volume of $136.3 billion. In monthly terms, sales dipped in May and June from April’s record high, as consumers spent more on autos and gasoline.
On a same-store basis, restaurant operators reported a positive 2nd quarter. Respondents to the Association’s monthly Tracking Survey reported a net increase in same-store sales during each month of the quarter, with an average of 55 percent of operators posting higher same-store sales each month.
Looking forward, restaurant operators are generally optimistic about sales growth in the months ahead. In the July Tracking Survey, 46 percent of restaurant operators said they expect to have higher sales in six months (compared to the same period in the previous year), while only 11 percent of restaurant operators expect their sales to decline.
Economy Still a Concern
While restaurant operators are generally optimistic about their sales prospect in the months ahead, they are somewhat less bullish about the direction of the economy. In the July Tracking Survey, 30 percent of restaurant operators said they think economic conditions in six months will be better than they are now, while 15 percent expect conditions to worsen. This measure of economic sentiment has remained essentially unchanged for the last six months, which suggests operators are not fully convinced that the economic recovery is fully entrenched.
In fact, when asked in July to identify the top challenge facing their business, the economy was listed as the top concern by 21 percent of restaurant operators, followed closely by food costs at 17 percent.
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Restaurant Operators’ Outlook for Economic Conditions in Six Months
Source: National Restaurant Association, Restaurant Industry Tracking Survey