Soft sales and traffic levels and a deteriorating outlook among restaurant operators continue to affect restaurant performance. The National Restaurant Association’s Restaurant Performance Index (RPI) remained essentially flat in July, and stood below 100 for the third consecutive month.
“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 National Restaurant Association.
The RPI stood at 99.4 in July, down 0.1 percent from June and its fourth consecutive decline. However, the RPI is at a significantly higher level now than it was a year ago.
A positive sign in the current RPI is operators’ capital spending plans, which showed a slight uptick. Forty-three percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 41 percent who reported similarly in June. As for the current situation, 45 percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up slightly from 43 percent who reported similarly last month.
The RPI consists of two components, the Current Situation Index and the Expectations Index. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 98.8 in July – unchanged from its June level. In addition, the Current Situation Index remained below 100 for the 35th consecutive month, which signifies contraction in the current situation indicators.
Restaurant operators reported negative same-store sales for the fourth consecutive month in July, as well as a net decline in customer traffic levels.
The Expectations Index, which measures restaurant operators’ six-month outlook, stood at 100.0 in July – down 0.1 percent from June and its lowest level since December 2009. In addition, the Expectations Index declined for the fourth consecutive month after reaching a three-year high in March.
Thirty-eight percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), the lowest level in six months.
The RPI is a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry, and is based on a monthly survey among restaurant operators nationwide on a variety of indicators including sales, traffic, labor, and capital expenditures.
The full report of the July Restaurant Performance Index is available online. Additional data and trends analysis can be found on Restaurant TrendMapper.
Also, watch a video of Hudson Riehle proving an industry update, including the July RPI, and wholesale food price and international tourism trends.
