Foodservice outlook cloudy, optimism builds
January 5, 2010
by Bryan Salvage
WASHINGTON — During November, the outlook for the restaurant industry remained cloudy according to the National Restaurant Association’s comprehensive index of restaurant activity, which registered its third decline in the last four months. The association’s Restaurant Performance Index (R.P.I.) — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 97.8 in November, down 0.2% from its October level.
The R.P.I. also remained below 100 for the 25th consecutive month, which signifies contraction in the index of key industry indicators.
“Although the R.P.I. remained below 100 for the 25th consecutive month, which signals contraction, restaurant operators are cautiously optimistic that conditions will improve in the months ahead,” said Hudson Riehle, senior vice president of the Research and Knowledge Group. “Restaurant operators reported a positive six-month sales outlook for the first time in three months, and remained optimistic that the economy will improve during the next six months.”
The R.P.I. is based on the responses to the N.R.A.’s Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures.
The Restaurant Performance Index is constructed so the health of the restaurant industry is measured in relation to a steady-state level of 100. 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), was 96.0 in November — down 0.5% from October and tied for its second-lowest level on record. November also represented the 27th consecutive month below 100, which signifies contraction in the current situation indicators.
However, restaurant operators are somewhat more optimistic about sales growth in the months ahead. Thirty-one percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 29% who reported similarly last month. In comparison, 24% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, down from 29% who reported similarly last month.