Declines in same-store sales and customer traffic levels helped push the National Restaurant Association’s Restaurant Performance Index for November below 100 for the first time in three months.
The RPI fell to 99.9 in November, a decline of 0.8 percent from October. But while a number below 100 signifies contraction in the index of key foodservice business indicators, the NRA said the slippage doesn’t automatically herald another downward slide for the industry.
“While the RPI’s November decline was largely the result of softer same-store sales and traffic performances, it doesn’t necessarily mean the industry’s recovery is in peril,” said Hudson Riehle, the NRA’s senior vice president of the research and knowledge group. “Like the economy as a whole, the restaurant industry’s road to recovery will be one with occasional bumps along the way.
“Overall, the economic fundamentals of the restaurant industry remain positive, which will likely lead to stronger sales results in the months ahead,” Riehle said.
Watch Riehle's analysis of the November results:
Stephen Anderson, senior analyst of restaurants for institutional trading firm Miller Tabak + Co. LLC in New York, agreed with Riehle, calling the November decline “a hiccup, not a reversal in our industry outlook.”
He also forecast that the NRA’s December results “will show another decline, though we suggest these results should be discounted for the timing of Christmas Eve and Christmas Day, which are likely to hurt most full-service dining operators.”
Nevertheless, he continued, “we still contend a gradual improvement in the economy will help restaurant operators.”
The 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 restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions.
The NRA’s Current Situation Index fell to 98.7 in November, a dip of 1.3 percent from October and the first decline since May. October was the first time since August 2007 that the Current Situation Index reached the 100 mark.
The Expectations Index slipped to 101.2 in November, down 0.2 percent from October and its first decline in four months. Despite the decline, the NRA said operators continue to be “relatively optimistic about sales growth in the months ahead.”
Some 42 percent of operators expect to have higher sales in six months, compared with the same period in the year-ago period — about the same as the 43 percent who voiced similar sentiments in October.
In addition, 37 percent of foodservice operators expect the overall economy to improve in six months, up from 35 percent last month.
The RPI is based on responses to the NRA’s monthly tracking survey. The full report is available at http://www.restaurant.org/pdfs/research/index/201011.pdf.
Contact Paul Frumkin at [email protected].