Foodservice Operator Outlook Remains Uncertain

The National Restaurant Association's Restaurant Performance Index stood at 99.4 percent, a decline of 0.1 percent from June. This was the third consecutive month the RPI stood at less than 100, which signifies contraction in the key industry indicators.

A monthly composite index that tracks the health and outlook of the U.S. restaurant industry, the RPI consists of two main components: the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures, stood at 98.8 in July – unchanged from its June level. This was the 35th consecutive month this index was less than 100.

Thirty-nine percent of restaurant operators reported a same-store sales gain between July 2009 and July 2010, matching the proportion of operators who reported higher sales in June. Meanwhile, 44 percent of operators reported a same-store sales decline in July, compared to 43 percent of operators who reported negative sales in June.

Restaurant operators also reported a net decline in customer traffic levels in July. Thirty-five percent of restaurant operators reported an increase in customer traffic between July 2009 and July 2010, up slightly from 33 percent of operators who reported higher customer traffic in June. Forty-six percent of operators reported a traffic decline in July, up from 43 percent who reported lower traffic in June.

Restaurant operators reported relatively steady capital spending levels in recent months. Forty-five 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 Expectations Index, which measures restaurant operators' six-month outlook for same-store sales, employees, capital expenditures and business conditions, 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, down from 42 percent last month and the lowest level in six months.
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