Restaurant Industry Still In Contraction Mode

A good indicator for the state of the consumer is the National Restaurant Association's Performance Index, which tracks restaurant activity. The NRA reported that in August the index declined to 99.5 (below 100 signals contraction). What I find confusing is that consumers have all the money in the world for ipods, ipads, and iphones, but not for casual dining. From the NRA:
As a result of continued soft sales and traffic levels, the National Restaurant Association’s comprehensive index of restaurant activity remained below 100 for the fourth consecutive month in August. The Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.5 in August, essentially unchanged from the previous three months. In addition, the RPI stood below 100 for the fourth consecutive month, which signifies contraction in the index of 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 98.9 in August – up slightly from a level of 98.8 in July. However, the Current Situation Index remained below 100 for the 36th consecutive month, which signifies contraction in the current situation indicators.

Restaurant operators also continued to report a net decline in customer traffic levels in August. Thirty-five percent of restaurant operators reported an increase in customer traffic between August 2009 and August 2010, matching the proportion of operators who reported higher customer traffic in July. Forty-two percent of operators reported a traffic decline in August, down slightly from 46 percent who reported lower traffic in July.

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.

Chart Source: American Restaurant Association


1 comment:

  1. The restaurant industry is really in three different classes upscale midscale and low scale. Low scale and upscale do better in a recession than midscale