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Restaurant sales and traffic dip in August

National Restaurant Association’s Restaurant Performance Index indicates pessimistic industry outlook

A pervasive sense of pessimism dominated the foodservice community in August, pushing the National Restaurant Association’s Restaurant Performance Index to its lowest level in 13 months.

Impacted by softer sales and declining traffic, the RPI fell to 99.4 in August, a decrease of 0.3 percent from its July level.

This marks the second consecutive month the RPI was below 100, indicating contraction in key foodservice industry indicators, NRA officials said.

“The August decline in the Restaurant Performance Index resulted from the softening of both current situation and expectations indicators, as well as Hurricane Irene,” said Hudson Riehle, the NRA’s senior vice president of the Research and Knowledge Group. “Although restaurant operators reported net positive same-store sales results in August, their six-month outlook for both sales growth and the economy continued to deteriorate.”

The NRA said less than one in five operators expect economic conditions to rebound in the next six months.

“It is important to note that the industry’s August performance is a substantial improvement over the 2008-2009 period,” Riehle added, “but overall, the near-term health of the restaurant industry will depend heavily on the economy’s ability to create jobs and bolster consumer confidence.”

Hear Riehle’s industry update; story continues below

The Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures, fell to 99.3 in August, a decline of 0.5 percent from July, and the second consecutive monthly decline.

While foodservice operators generated net positive same-store sales in August, the overall results were softer than in recent months, the NRA said. According to the RPI, 45 percent of operators reported same-store sales gains in August compared with the year-ago period, while 37 percent of operators reported lower same-store sales.

By comparison, 48 percent of operators reported higher same-store sales in July, while 34 percent reported a sales decrease.

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Operators also reported a net decline in traffic for the first time in three months, the NRA said. The association said 34 percent of operators reported a rise in customer traffic between August 2010 and August 2011, a decline from 40 percent of restaurateurs who reported higher traffic in July. Some 42 percent of operators reported a traffic decline in August, an increase from 37 percent reporting softer traffic in July.

The Expectations Index, which measures restaurant operators’ six-month outlook for four indicators — same-store sales, employees, capital expenditures and business conditions — slipped to 99.5 in August, a decrease of 0.1 percent from July, marking the Index’s lowest level in nearly two years.

Read the full report

August also was the second consecutive month the Expectations Index was below 100, which the NRA said reflects operators’ uncertainty about future business conditions.

The RPI found that 33 percent of restaurateurs anticipate that sales will rise in six months compared with the same period a year ago. That marks a decrease from 39 percent last year and the lowest level in 19 months.

Operators also are generally downbeat about the direction of the overall economy, with only 18 percent saying they expect economic conditions to improve in the next six months.

The RPI, which is based on responses to the NRA’s Restaurant Industry Tracking Survey, gauges the health and outlook of the foodservice industry on a monthly basis through such indicators as traffic, labor and capital expenditures.

Contact Paul Frumkin at [email protected].

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