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Report: Restaurant industry contracts in August

NRA Restaurant Performance Index declines to 99.6

The restaurant industry contracted in August, the National Restaurant Association said late last week, as current conditions for operators fell to their lowest level in more than three years.

The NRA’s Restaurant Performance Index fell 1 percentage point, to 99.6 in August, below the 100-mark at which the NRA considers the industry to be in expansion mode. The August results were the first time the NRA said the restaurant industry was contracting in eight months.

The results might have been worse, but some operators remained optimistic that sales would improve in the coming months.

“Restaurant operators reported soft sales and traffic in August, along with corresponding dips in the labor indicators,” Hudson Riehle, NRA senior vice president of research, said in a statement. “While the expectations component of the index remains in expansion territory, it too has trended downward in the past several months.”

The monthly RPI, based on a survey of restaurant operators around the country, is composed of two separate indexes: one that measures the current situation, and another that measures operators’ expectations.

The Current Situation Index reported its worst performance since February 2013, at 98.6, falling 1.9 percentage points from July.

Only 30 percent of surveyed operators reported a same-store sales increase in August, while 53 percent reported a decrease. The percentage reporting a same-store sales decrease rose from 45 percent in July.

Meanwhile, 21 percent of surveyed operators said traffic increased in August, while 59 percent said traffic fell. August was the fourth consecutive month that operators reported a net traffic decline.

But surveyed operators seemed to believe the situation would improve: The Expectations Index fell only 0.2 percent from July, to 100.6.

A third of surveyed operators expected sales to improve in the next six months, rising from 30 percent who said they expected improvement the previous month.

Meanwhile, operators continue to build. According to the NRA, 56 percent of surveyed operators made a capital expenditure for new equipment or expansion in the past three months.

And 62 percent of surveyed operators said they planned a capital expenditure over the next six months. But that figure fell from 65 percent the previous month.

Surveyed operators remain pessimistic when it comes to the overall economy. Seventeen percent expected conditions to improve, while 29 percent expected conditions to worsen.

August was the 10th straight month that operators’ views of the economy were more negative than positive.

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

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