Soft sales, traffic levels hamper restaurants
October 1, 2010
by Bryan Salvage
WASHINGTON – Continued soft sales and traffic levels have resulted in the National Restaurant Association’s Restaurant Performance Index (RPI) registering essentially flat for August. Meanwhile, restaurant operators’ outlook remained cautious.
In August, the comprehensive index of restaurant activity stood at 99.5, essentially unchanged from the previous three months (up 0.1% from July). The RPI stood below 100 for the fourth consecutive month, which signifies contraction in the index of key industry indicators.
“Although the sales and traffic indicators remained soft in August, restaurant operators remain relatively optimistic that conditions will improve in the months ahead,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the association. “Restaurant operators’ outlook for sales growth improved somewhat in August, and their plans for capital spending activity held steady.”
The RPI consists of the Current Situation Index and the Expectations Index. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 98.9 in August – up slightly from a level of 98.8 in July.
Restaurant operators reported a net decline in same-store sales for the fifth consecutive month in August, with results almost identical to the previous two months. Operators also continued to report a net decline in customer traffic levels and relatively steady levels of capital spending.
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 100.1 in August – up slightly from a level of 100.0 in July.
Restaurant operators are relatively positive about sales growth in the months ahead, but they are not as optimistic about the direction of the overall economy.