Operators reported softer same-store sales and traffic levels; outlook for economic conditions fell sharply
The National Restaurant Association's Restaurant Performance Index (RPI) fell to 99.7 in July from 100.6 in June—the lowest level in 11 months. This was due to soft same-store sales and a dampened outlook among operators.
"This survey month was burdened with the debt ceiling crisis and the downgrade in the nation's credit rating, which added an additional layer of uncertainty in an already fragile economic recovery," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA.
Index values of more than 100 indicate that key industry indicators are in a period of expansion, and index values of less than 100 represent a period of contraction for key industry indicators. 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 99.8 in July — down 0.7 percent from June's level of 100.5.
Forty-eight percent of restaurant operators reported a same-store sales gain between July 2010 and July 2011, down slightly from 51 percent of operators who reported higher same-store sales in June. Meanwhile, 34 percent of operators reported a same-store sales decline in July, up from 31 percent of operators who reported lower sales in June.
Forty percent of restaurant operators reported an increase in customer traffic between July 2010 and July 2011, down from 44 percent of operators who reported higher traffic in June. In comparison, 37 percent of operators reported a traffic decline in July, up from 33 percent who reported lower traffic in June.
Forty-three percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the lowest level in five months.
The Expectations Index, which measures restaurant operators' six-month outlook, stood at 99.6 in July – down 1.1 percent from June's level of 100.7. In addition, July represented the first time in 20 months that the Expectations Index fell below 100.
Restaurant operators remain relatively optimistic about sales growth in the months ahead. Thirty-nine percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), essentially unchanged from 40 percent who reported similarly last month. In comparison, 23 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 from just 16 percent who reported similarly last month.
Forty-two percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down from 50 percent who reported similarly last month.
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