Foodservice operators were downbeat about their businesses in July, driving the National Restaurant Association’s Restaurant Performance Index to its lowest level in 11 months.
The RPI, a monthly composite that tracks the health of and outlook for the foodservice industry, fell to 99.7 in July, down from 100.6 in June.
A number below 100 reflects a contraction in the NRA’s index of key industry indicators.
“Although same-store sales and customer traffic levels remained positive in July, restaurant operators’ outlook for the economy took a pessimistic turn,” Hudson Riehle, the NRA’s senior vice president of the Research and Knowledge Group, said. “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.”
“However, if the economy can avoid additional negative shocks in the months ahead, the overall fundamentals continue to point toward growth in the second half of the year,” Riehle added.
Watch Riehle provide an industry update; story continues below
The NRA’s Restaurant Performance Index consists of two components — the Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures; and the Expectations Index, which gauges operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions.
The Current Situation Index in July decreased 0.7 percent to 99.8 from June’s level of 100.5. While the NRA said that same-store sales and customer traffic remained in positive territory for the month, softness in the labor and capital spending indicators weighed down the Current Situation Index, pushing it below 100 for the second time in the last three months.
NRA research also revealed that 48 percent of restaurateurs reported a same-store sales gain between July 2010 and July 2011, down from 51 percent who reported higher same-store sales in June. By comparison, 34 percent of operators reported a same-store sales decline in July, up from 31 percent of operators who reported lower sales in June.
Customer traffic also sputtered in July, the NRA said. Forty percent of foodservice operators said they experienced an increase in customer traffic between July 2010 and July 2011, down from 44 percent who reported higher traffic in June. Meanwhile, 37 percent saw traffic decline in July, up from 33 percent who reported lower traffic in June.
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The Expectations Index fell 1.1 percent to 99.6 in July, down from June’s 100.7. The July figure marks the first time in 20 months that the Expectations Index fell below 100, reflecting a softening in operators’ outlook for the near future.
The RPI is based on responses to the NRA’s monthly tracking survey.
Contact Paul Frumkin at [email protected].