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Bruised optimism for foodservice industry

The NRA’s Restaurant Performance Index dropped below 100, signaling the contraction of key indicators

Impacted by declining same-store sales and customer traffic levels, foodservice operators were less upbeat about their businesses in May, pushing the National Restaurant Association’s Restaurant Performance Index below the 100 mark for the first time in six months.

The RPI, a monthly composite that tracks the health of and outlook for the foodservice industry, slipped to 99.9 in May, a decrease of 1.0 percent from its April level.

A number below 100 reflects a contraction in the NRA’s index of key industry indicators.

“Like the economy as a whole, the restaurant industry’s recovery hit a speed bump in May, with same-store sales and traffic levels softening from recent months,” said Hudson Riehle, the NRA’s senior vice president of the research and knowledge group, in a statement.

“However, the overall economic fundamentals of the restaurant industry remain positive, which will likely lead to stronger performances in the months ahead,” he added.

Watch a video of Riehle providing an industry update

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 measures operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions.

The Current Situation Index declined to 99.2 in May, tumbling 1.1 percent below April’s level of 100.3. The decrease marks the first time in three months the Current Situation Index has dropped below 100.

NRA research also found that more restaurateurs reported softer same-store sales in May. Only 39 percent of operators reported same-store sales increases between May 2010 and May 2011, down from a more robust 50 percent who reported higher same-store sales in April.

By comparison, 40 percent of restaurateurs reported that same-store sales declined in May, up from 31 percent of operators who reported lower sales in April.

Traffic also was off in May. The NRA said 33 percent of foodservice operators reported an increase in customer traffic between May 2010 and May 2011, a decrease from 38 percent who reported higher traffic in April. Meanwhile, 41 percent of operators reported that traffic fell in May, which was up from 35 percent in April.

The Expectations Index fell to 100.6 in May, a decrease from 101.5 in April. While May results reflected the tenth consecutive month above 100 for the Index, it was the fourth decline in the last five months, indicating a recent erosion of optimism in the foodservice industry.

The RPI is based on responses to the NRA’s monthly tracking survey. The full report is available online.

Contact Paul Frumkin at [email protected].

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