Restaurant operators’ optimism declines
WASHINGTON — The National Restaurant Association’s Restaurant Performance Index was 100.2 in July, a 1.1% decline compared with the month of June. Softer customer traffic and a dampening of operator optimism were cited as the reasons for the decline.
“Although restaurant operators reported positive same-store sales for the 14th consecutive month in July, their economic outlook for the months ahead continued to soften,” said Hudson Riehle, senior vice-president of the Research and Knowledge Group for the N.R.A. “Only 22% of restaurant operators expect economic conditions to improve in the next six months, the lowest level in 10 months.
“Despite their uncertainty, roughly one-half of restaurant operators still plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, which is a positive indicator for both the industry’s supply chain and the overall economy.”
The R.P.I.’s “current situation index,” which measures current trends in four industry indicators — same-store sales, traffic, labor and capital expenditures — stood at 99.8 in July, down 1.7% from June’s level of 101.5. Although same-store sales remained positive in July, the softness in the labor and customer traffic indicators outweighed the performance, which led to a current situation index falling below 100 for the first time in nine months.
The R.P.I.’s “expectations index,” which measures restaurant operators’ six-month outlook for four industry indicators such as same-store sales, employees, capital expenditures and business conditions, stood at 100.7 in July — down 0.6% from June and the fourth consecutive monthly decline. Although July marked the 11th consecutive month that the expectations index stood above 100, it also represented the weakest level in nine months.
Overall, restaurant operators remain cautiously optimistic that their sales levels will improve in the months ahead, though their outlook softened from recent months. Forty-two per cent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 50% who reported similarly last month. Meanwhile, 15% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, up from 13% last month.
In contrast to their generally positive outlook for sales, restaurant operators are noticeably less optimistic about the direction of the overall economy. Only 22% of operators said they expect economic conditions to improve in six months, down from 28% in June and the lowest level in 10 months. Meanwhile, 22% of operators said they expect economic conditions to worsen in the next six months, while 56% think conditions will stay about the same.