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Restaurant Owners' Outlook Dims
WASHINGTON -- Bolstered by stronger same-store sales and customer traffic levels, the National Restaurant Association's Restaurant Performance Index stood above 100 for the eighth consecutive month in June. But while the overall operating environment remains positive, operators have grown more pessimistic about the future.
The overall index is unchanged from May, and June represents the eighth consecutive month that the index remained above 100, which signifies expansion in the index of key industry indicators.
The index reflects "improvements in each of the four current situation indicators in June," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "Restaurant operators reported positive same-store sales and customer traffic, while their capital spending activity advanced for the second consecutive month.
"However, although the overall current operating environment remains positive, operators have definitely tempered their expectations for the future," Riehle continued. "Each of the four expectations indicators softened in June, including restaurant operators' least positive economic outlook in eight months. Still, market conditions are substantially better than two and three years ago."
Restaurant operators reported positive same-store sales for the 13th consecutive month in June, as 61% reported a same-store sales gain between June 2011 and June 2012, unchanged from the proportion who reported a sales gain in May. Meanwhile, 24% reported lower same-store sales in June, down from 28% in May.
Restaurant operators reported stronger customer traffic levels in June. Exactly half % reported higher customer traffic levels for the period, up from 42% who reported positive traffic in May. In comparison, 29% reported lower customer traffic levels in June, down from 39% in May.
Restaurant operators reported an uptick in capital spending for the second consecutive month, as 48% said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up slightly from 46% who reported similarly last month.
Fully 50% of operators expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 48% who reported similarly last month. However, 13% expect their sales volume in six months to be lower than it was during the same period in the previous year, the highest proportion in eight months.
While operators are reasonably optimistic about their sales prospects in the months ahead, they are decidedly less bullish about the direction of the overall economy. Only 28% expect economic conditions to improve in six months, down from 36% last month. Meanwhile, 21% expect economic conditions to worsen in the next six months, up from 19% last month.
For the ninth consecutive month, restaurant operators reported positive expectations for staffing growth in the coming months, with 18% planning to increase staffing levels in six months (compared to the same period in the previous year) and 12% expecting to reduce staffing levels.
Some 51% plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 55% who reported similarly last month.
Founded in 1919, the National Restaurant Association is an association that comprises 970,000 restaurant and foodservice outlets and a workforce of nearly 13 million.
Published by The Business Journal, Youngstown, Ohio.