Published on Monday, 03 December 2012
Written by The Editors
Operators' pessimism about the economy and sales growth opportunities drive this restaurant industry barometer to its lowest level in 14 months.
The National Restaurant Association's Restaurant Performance Index experienced a 0.9 percent decline in October, landing at 99.5. In addition to being a 14-month low for this monthly index of restaurant industry economic indicators, a rating of less than 100 indicates the industry is in a period of contraction, according to the NRA.
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 99.3 in October, down 0.6 percent from a level of 99.9 in September. Key data points from the Current Situation Index include:
- Forty percent of restaurant operators reported a same-store sales gain between October 2011 and October 2012, down from 48 percent in September.
- Thirty-six percent of operators reported lower same-store sales in October, essentially unchanged from 35 percent in September.
- Thirty percent of restaurant operators reported higher customer traffic levels between October 2011 and October 2012, down from 36 percent.
- Forty one percent of operators reported lower customer traffic levels in October, unchanged from September.
- Forty-six percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 49 percent.
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 99.7 in October, down 1.2 percent from September. This is the first time in 14 months that the Expectations Index failed to exceed 100. Key data points from the Expectations Index include:
- Thirty-one percent of restaurant operators expect to have higher sales in six months compared to the same period in the previous year, down from 45 percent last month. That's the lowest level in three years.
- Twenty one percent of restaurant operators expect their sales volume in 6 months to be lower than it was during the same period in the previous year, up from 11 percent last month.
- Twenty percent of restaurant operators said they expect economic conditions to improve in 6 months, down from 26 percent last month. In contrast, 38 percent of operators said they expect economic conditions to worsen in the next six months, up from 18 percent last month and the highest level in nearly four years.
- Fifty percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 44 percent who reported similarly last month.