Report: Despite weak same-store sales, restaurants keep building

Report: Despite weak same-store sales, restaurants keep building

Capital expenditures remain strong, boosting NRA performance index in July

Restaurants keep building despite mixed same-store sales, providing a boost to the restaurant industry during a summer of doldrums, according to the National Restaurant Association.

The NRA’s Restaurant Performance Index increased modestly in July, to 100.6, from 100.3 in June. The biggest reason: Capital expenditures.

Nearly two-thirds of surveyed operators — 64 percent — told the NRA that they made a capital expenditure in the past three months. Sixty-five percent said they expected to spend in the next six months.

That continues the industry’s aggressive trend of remodeling and expansion in recent years.

“The primary driver of the modest RPI gain in July was positive capital expenditure levels,” Hudson Riehle, NRA senior vice president of research, said in a statement.

Capital spending indicates that operators are confident in their future, despite weak sales, he said.

“While there is some volatility among index components, when looking at the current situation, operators’ plans for capital expenditures six months out remain solid,” Riehle said. “This fits in with how operators’ outlook for the future remains overall positive despite general economic choppiness.”

The RPI consists of two components: The Current Situation Index and the Expectations Index, the latter of which tracks operator expectations for the coming six months. The index is based on the association’s monthly survey of operators.

The Current Situation Index was 100.4 in July, rising 0.5 percent from 99.9 in June. But same-store sales were mixed — 44 percent of operators said same-store sales increased in July, while 45 percent said same-store sales decreased. It marked the third straight month of mixed same-store sales.

But traffic fared worse. Only 33 percent of surveyed operators said traffic increased in July, while 46 percent said traffic fell.

Expectations remained muted, but that index rose 0.1 percent in July, to 100.8. Overall, 33 percent of surveyed operators expected sales to grow in six months, while 21 percent expected sales to drop. Only 18 percent expected overall economic conditions to improve, while 28 percent expected conditions to worsen.

Contact Jonathan Maze at [email protected]
Follow him on Twitter at @jonathanmaze

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