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NRA: Restaurant performance weakens in May

NRA: Restaurant performance weakens in May

More operators saw same-store sales decline, and expectations dip

Restaurant sales softened in May, along with operator expectations, as the industry continued its choppy 2016, according to the latest Restaurant Performance Index from the National Restaurant Association.

The monthly indication of the health of the industry fell 0.9 percent to 100.6 in May, from 101.6 in April. The NRA considers the industry to be in expansion mode if the index is above 100.

“The RPI continued along a choppy trend line in May, with the index bouncing between moderate gains and losses in recent months,” Hudson Riehle, senior vice president of research for the NRA, said in a statement.

“Much of the May dip came from declines in the same-store sales and customer traffic indicators, which softened from their stronger April performance.”

The index is comprised of two parts: one that measures the current situation, and another that measures operators’ expectations. The index is calculated using responses to the association’s monthly operator survey

Operators reported a net decline in same-store sales in May — 40 percent said their same-store sales increased in May, while 42 percent said same-store sales fell. By comparison, 58 percent of operators said their same-store sales increased in April.

Traffic was worse. Only 27 percent of operators said traffic increased in May, and 46 percent said traffic fell. In April, 52 percent of operators said traffic increased.

May was the first time in five months that operators reported a net same-store sales decline — which likely indicates a broad weakening in the sales environment.

The NRA’s Current Situation Index fell 1.8 percent in May to 100.2. That remained slightly above the 100, industry expansion level.

The Expectations Index, meanwhile, was unchanged at 101 in May. Yet operators’ expectations have been trending lower in recent months, the NRA said, and 34 percent of operators expect to have higher sales in six months, while 12 percent expect lower sales. Fifty-four percent expect sales to remain the same. That was largely unchanged from April.

But operators are not optimistic about the economy: Only 12 percent expect economic conditions to improve, while 25 percent expect conditions to worsen. That’s the seventh straight month that operators had a negative outlook.

Yet, despite a dipping economic outlook and weakening sales, operators continue to build. Sixty-four percent of operators said they made a capital expenditure in the past three months. And 62 percent expect to make a capital expenditure on remodeling or expansion or new equipment in the next six months.

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

TAGS: Finance News
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