Foodservice sector reports decline in activity

by Bryan Salvage
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WASHINGTON — The National Restaurant Association’s index of restaurant activity for May registered its first decline in five months. A monthly composite index that tracks the current and future status of the U.S. restaurant industry, N.R.A.’s Restaurant Performance Index stood at 98.3 in May, down 0.3% from April and its 19th consecutive month below 100.

"Although restaurant operators remain relatively optimistic that economic conditions will improve in six months, their outlook for sales growth and capital spending activity softened somewhat," said Hudson Riehle, N.R.A. senior vice-president of research and information services. The full report is available online.

Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 96.9 in May — down 0.1% from April. May represented the 21st consecutive month below 100, which signifies contraction in the current situation indicators.

Restaurant operators reported negative same-store sales for the 12th consecutive month in May, with results similar to the April performance. Twenty-six percent of restaurant operators reported a same-store sales gain between May 2008 and May 2009, matching the proportion who reported a sales gain in April. Sixty percent of operators reported a same-store sales decline in May, compared to 59% who reported lower sales in April.

Restaurant operators also reported negative customer traffic levels in May, marking the 21st consecutive month of traffic declines.

The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 99.6 in May — down 0.5% from April and its first decline in six months. April’s level of 100.2 represented the first time in 18 months that the Expectations Index surpassed 100, which signifies expansion in the forward-looking indicators.

Despite the softer sales outlook, restaurant operators remained relatively optimistic that the economy will improve in the months ahead.

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