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Restaurant industry contracting, says NRA

The NRA's monthly composite index reflecting the health and outlook for the nation's restaurant industry is reflecting the overall shadow that appears to be forming over food service this fall. The NRA's Restaurant Performance Index fell below 100 in August to 99.6 – indicating the industry is contracting.

October 6, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

The NRA's monthly composite index reflecting the health and the outlook for the nation's restaurant industry is reflecting the overall shadow that appears to be forming over food service this fall. The NRA reports its Restaurant Performance Index fell below 100 in August to 99.6 — down 1 percent, and the first time the index has dropped below 100 in eight months, according to the NRA. That's important because the organization says that anything below 100 indicates the industry is contracting.  

Moreover, the NRA's Current Situation Index was 98.6 in August — down 1.9 percent from July and the lowest value since February 2013. The organization adds though that its Expectations Index was 100.6 in August. That's down slightly from 100.8 in July, but still above that critical 100 mark.

"Restaurant operators reported soft sales and traffic in August, along with corresponding dips in the labor indicators," said NRA Senior Vice President of Research Hudson Riehle, in a statement. "While the expectations component of the index remains in expansion territory, it too has trended downward in the past several months."

The RPI relies on a survey of the nation's restaurant operators and includes an index measuring the current situation, and another that measures future expectations. According to the NRA, only 30 percent of surveyed operators reported a same-store sales increase in August, while 53 percent reported a decrease — up from 45 percent who did so in July.

Just 21 percent of those surveyed reported better traffic in August, though 59 percent said the opposite, making August the fourth straight month of net traffic decline. Still, optimism prevails, with just a 0.2 percent drop in the expectations of operators from the July level. In fact, a third of those polled believe sales will rebound in the next six months, slightly more than the same a month earlier.

That may be why the NRA found that 62 percent of operators were planning a capital expenditure over the next six months, about 3 percentage points lower than said so in July. Most notably though, this is not a new attitude, since the NRA said August was the tenth month that operators expressed more pessimism about the economy than optimism.  

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.