Restaurant Industry Outlook
Restaurant Visits Across the Globe Generally Weak in Third Quarter, Reports NPD
─Canada, China, France, and Italy Post Traffic Gains
Chicago, January 4, 2012 ─ Low consumer confidence and the stressed global economy were reflected in the weak foodservice traffic in most countries around the world in the quarter ending September 2011, according to The NPD Group, a leading market research company. The growing or more stable domestic economies of Canada, China, and France encouraged more visits over last year, in contrast, Italy, with one of the more challenging economic environments, also experienced traffic gains in the quarter.
According to NPD’s CREST®, which tracks commercial foodservice usage in Australia, Canada, China, France, Germany, Italy, Japan, Spain, United Kingdom, and the United States, restaurant traffic declines were steepest in Spain, due to persistent economic weakness, and Japan, which is still feeling the after effects of this year’s earthquake. Australia experienced traffic declines in the quarter in spite of a growing economy. China posted traffic gains of 19 percent over the same quarter last year.
“Although foodservice traffic in China experienced double-digit growth over last year, the country’s consumer confidence is not as strong as last year,” said Christina Ma, director, China foodservice. “Chinese consumers have become more careful about spending their money on foodservice visiting, and are increasingly selecting inexpensive foodservice channels, such as bakery/coffee shop and retail, and ordering less food and beverage items.”
According to NPD, foodservice chains continue to grow around the world and visits to independent foodservice concepts have stabilized and returned to growth in some countries. Lunch traffic appears to be growing in some of the stronger economies while breakfast, which is largely a non-core daypart outside of Italy and China, is growing in most markets. Visits during the supper daypart are also growing in most countries. Promotions are still important in attracting consumers to visit foodservice outlets.
“There still is a mixed bag of health and weakness across the global foodservice industry,” says Bob O’Brien, senior vice president of global foodservice at NPD. “While a few of the countries we track posted traffic gains, the news for the third quarter of this year remains disappointing.”
NPD CREST will pilot a foodservice usage tracking program in Mexico the first calendar quarter of 2012 and will issue a report mid-year.
———————————————————
1/08/2012 – Restaurant Industry Outlook Improved in November as Restaurant Performance Index Rose to Five-Month High
Driven by positive same-store sales and an increasingly optimistic outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) rose to its highest level in five months. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.6 in November, up 0.6 percent from October. In addition, November represented the second time in the last three months that the RPI stood above 100, which signifies expansion in the index of key industry indicators.
“The November increase in the Restaurant Performance Index was fueled by broad-based gains in both the current situation and forward-looking indicators,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Restaurant operators reported their strongest net positive same-store sales results in more than four years, while customer traffic levels also grew in November.”
“Among the forward-looking indicators, restaurant operators’ outlook for both sales growth and the overall economy rose to their highest levels in seven months,” Riehle added.
The RPI is constructed so that 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, and index values below 100 represent a period of contraction for key industry indicators. The RPI consists of two components, 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 100.2 in November – up 0.8 percent from October’s level of 99.5. November marked the second time in the last three months that the Current Situation Index stood above 100, which signifies expansion in the current situation indicators.
Restaurant operators reported positive same-store sales for the sixth consecutive month inNovember. Fifty percent of restaurant operators reported a same-store sales gain betweenNovember 2010 and November 2011, while just 28 percent reported a same-store sales decline. This marked the strongest net positive sales performance since August 2007, when 54 percent of operators reported a sales gain and 29 percent reported lower sales.
Restaurant operators also reported stronger customer traffic levels in November. Forty-onepercent of restaurant operators reported higher customer traffic levels between November 2010 and November 2011, while 32 percent of operators reported a traffic decline. In October, 37percent of operators reported higher customer traffic, while 39 percent reported a traffic decline.
Capital spending activity among restaurant operators trended upward in recent months. Forty-sixpercent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the highest level in five months.
12/06/2011 – The U.S. restaurant industry entered 2011 hopeful after ending 2010 with two consecutive quarters of one percent traffic increases, but the continuing economic saga of high unemployment and low consumer confidence kept visits to restaurants flat in the first three calendar quarters of the year, according to The NPD Group, a leading market research company.
Restaurant traffic was just above the line at +0.2 percent in the quarter ending March and just below the line at -0.4 percent for both the second and third calendar quarters, according to NPD’s CREST® service, which continually tracks consumer use of U.S. restaurants. Quick service restaurants (QSR)/fast food, which represent 78 percent of industry visits, held up the industry with a one percent gain in the first quarter ending March, and visits flat in each the second and third quarters. Visits to casual dining restaurants, which represent 11 percent of industry traffic, declined two percent in both the first and second quarters of 2010 and by one percent in the third quarter. Midscale/family style restaurants, which represent 10 percent of industry visits, saw traffic decline by two percent in the first quarter and down by four percent in the quarter ending September.
10/11/2011 – Dampened by softer sales and traffic levels and continued uncertainty among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) declined for the second consecutive month in August. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.4 in August, down 0.3 percent from July.
In addition, August marked the second consecutive month that the RPI stood below 100, the level above which signifies expansion in the index of key industry indicators.The RPI is constructed so that 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, and index values below 100 represent a period of contraction for key industry indicators. The RPI consists of two components, 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 99.3 in August – down 0.5 percent from July and the second consecutive monthly decline.
Although restaurant operators reported net positive same-store sales in August, the overall results were softer than recent months. Forty-five percent of restaurant operators reported a same-store sales gain between August 2010 and August 2011, while 37 percent of operators reported lower same-store sales. In July, 48 percent of operators reported higher same-store sales, while 34 percent reported a sales decline.
08/22/2011 – Driven by stronger same-store sales and traffic levels and a more optimistic outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) rose above 100 in June. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.6 in June, up 0.8 percent from May’s level of 99.9. In addition, June represented the sixth time in the last seven months that the RPI stood above 100, which signifies expansion in the index of key industry indicators.
The RPI is constructed so that 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, and index values below 100 represent a period of contraction for key industry indicators. The RPI consists of two components, 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 100.5 in June – up a solid 1.4 percent from May’s level of 99.2. The Current Situation Index stood above 100 in three of the last four months, which signifies expansion in the current situation indicators.
Restaurant operators reported stronger same-store sales results in June. Fifty-one percent of restaurant operators reported a same-store sales gain between June 2010 and June 2011, up from 39 percent of operators who reported higher same-store sales in May. Meanwhile, 31 percent of operators reported a same-store sales decline in June, down from 40 percent of operators who reported lower sales in May.
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 100.7 in June – up slightly from May’s level of 100.6. June represented the 11th consecutive month above 100 for the Expectations Index, and the modest improvement came on the heels of three consecutive monthly declines.
Via National Restaurant Association
03/25/11 – Although visits to U.S. restaurants are still below the level registered six years ago, there were signs of improvement in the second half of 2010, according to The NPD Group, a leading market research company. NPD’s foodservice market research reports restaurant traffic was flat for the quarter ending December 2010, compared to a -3 percent decline for same quarter year ago. Visits to quick service restaurants increased in the second half of 2010.
Another sign that the foodservice industry is improving is that non-deal visits stopped declining, according to NPD’s CREST®, which continually tracks consumer usage of commercial and non-commercial foodservice outlets. Consumer spending at restaurants has also started to come back. Spending rose in the last three quarters of 2010, which yielded an increase in spending for 2010. The gain brings the industry nearly back to the dollar level registered in 2008.
“I believe that the improvements we’re experiencing in the industry are a result of pent up demand,” says Bonnie Riggs, restaurant industry analyst at NPD. “Consumers are tired of pinching pennies and Recession-weary and going to a restaurant is an affordable way to get out and have fun.”
According to NPD’s CREST OnSite®, which tracks usage of foodservice at business and industry, secondary schools, colleges and universities, hospitals, lodging, recreation, senior care, military, and vending segments, total non-commercial traffic declines eased in the fourth quarter compared to year-ago. Most notably, after 14 consecutive quarters of traffic losses, Business & Industry traffic increased +2 percent vs. year-ago.
"We are beginning to see many encouraging signs, however, with unemployment still over 9 percent and consumer confidence low, consumers continue to scrutinize every purchase,” says Riggs. “There’s no question value and promotion will continue to factor heavily in their restaurant selections. It will take a lot of creativity to drive more traffic in the coming year."
2/3/11 – Restaurant industry sales are expected to reach a record $604 billion and post positive growth in 2011 after a three-year period of negative real sales growth, according to National Restaurant Association research released today. The Association’s 2011 Restaurant Industry Forecast projects an industry sales increase of 3.6 percent over 2010 sales, which equals 1.1 percent in real (inflation-adjusted) terms.
The nation’s 960,000 restaurants will continue to be strong contributors to the recovery of the nation’s economy, with industry sales representing 4 percent of the U.S. gross domestic product and employees comprising nearly 10 percent of the U.S. workforce. Its total economic impact exceeds $1.7 trillion, as every dollar spent in restaurants generates $2.05 spent in the overall economy. Restaurants are the nation’s second-largest private sector employer with 12.8 million employees.
“As the national economy is slowly improving, the restaurant industry is climbing out of its most challenging period in decades to post positive real sales growth in 2011,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association. “As in 2010, restaurant industry job growth is expected to outpace the national economy this year, emphasizing the importance of industry to the nation’s economy.”
“The U.S. restaurant industry is an economic juggernaut whose annual sales are larger than 90 percent of the world’s economies – if it were a country, it would rank as the 18th largest economy in the world. While pockets of challenges remain, we are looking forward to a brighter future in 2011,” he added.
Via National Restaurant Association
1/27/11 – The number of U.S. restaurants declined by -1 percent, or a loss of 5,551 restaurants, from a year ago, according to a fall 2010 restaurant census conducted by The NPD Group, a leading market research company. According to NPD’s Fall 2010 ReCount®, which is a census of commercial restaurant locations in the United States compiled in the spring and fall each year, independent restaurant units dropped by -2 percent compared to a year ago, and chain counts were flat
Based on NPD’s Fall 2010 ReCount, which includes restaurants reported to be open as of September 30, 2010, the number of quick service restaurants, declined by -1 percent or 2,122 units. Full service restaurant units, which includes the casual dining, mid-scale, and fine dining segments also experienced a unit loss of -1 percent or 3,429 units.
“These past two years have been particularly tough for independents, which don’t have the resources to compete with the chains,” says Greg Starzynski, director, product development-foodservice at NPD. “Over the past few years we've lost several thousand independent restaurants."
1/24/11 – As food companies and restaurant operators make gallant attempts to keep from raising prices as a result of rising commodity and transportation costs, U.S. consumers are bracing to pay more for their food in 2011. According to food market research by The NPD Group, which has tracked all aspects of consumer eating behaviors in- and away-from-home for three decades, historically consumers have never let food costs rise faster than their incomes and have managed their food spending accordingly, whether choosing to eat at home or away from home.
“With food inflation accelerating in the last months of 2010 and government forecasts show it continuing into at least the first half of 2011, Americans will be making well-thought out choices this year on how they will feed themselves,” says Harry Balzer, chief industry analyst at NPD and author of Eating Patterns in America. “It amounts to ‘relative food inflation.’ They have so much to spend on food and they will carefully pick-and-choose how they spend it. Looking for more coupons and discounts, buying more private label foods, eating more leftovers, and generally getting the most bang for their buck.”
According to NPD’s in-home research, National Eating Trends®, and foodservice market research, CREST®, 72 percent of meals are prepared in homes, 18 percent are obtained from foodservice outlets, 8 percent are skipped and 2% are from unknown sources. Over the past two years U.S. consumers pulled back on their use of restaurants, and the industry lost 2.4 billion visits from year ending November 2008 thru November 2010, from 61.5 billion visits to 59.1 billion visits. Food deflation during this period gave supermarkets the edge in terms of consumer food spending. As the economy has begun to improve, Americans have started adding more restaurant visits back into their routines, but high unemployment continues to hamper the industry’s growth.
Via The NPD Group
1/6/11 – As a result of a downtick in same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) fell below 100 in November. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.9 in November, down 0.8 percent from October. November marked the first time in three months that the RPI stood below 100, the level above which signifies expansion in the index of key industry indicators.
“While the RPI’s November decline was largely the result of softer same-store sales and traffic performances, it doesn’t necessarily mean the industry’s recovery is in peril,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Like the economy as a whole, the restaurant industry’s road to recovery will be one with occasional bumps along the way.”
“Overall, the economic fundamentals of the restaurant industry remain positive, which will likely lead to stronger sales results in the months ahead,” Riehle added.
Via National Restaurant Association
1/4/2011 – From the enthusiasm for the strong Chinese recovery to the persistent economic concerns in Spain, the state of global foodservice in the third calendar quarter of 2010 was a reflection of each country’s economic state, according to foodservice market research by The NPD Group, a leading market research company. Visits to foodservice outlets in China, where the economy is prospering, increased by double-digits in the third quarter of this year compared to the same quarter last year, whereas foodservice traffic in Spain, which has an unemployment rate of 19.8 percent, declined by -3 percent from a year ago
According to NPD’s CREST®, which tracks commercial foodservice usage in Australia, Canada, China, France, Germany, Italy, Japan, Spain, United Kingdom, and the United States, restaurant traffic counts declined in most of the countries, with the exceptions of Australia and China. Average eater checks are up in all countries except Japan and in many countries the boost in checks is enough to overcome all or most of the continuing declines in traffic counts.
Via The NPD Group
12/14/10 – With continued high unemployment across the U.S., restaurant traffic remains down, -1 percent in the third calendar quarter of 2010, but positive signs point to restaurant traffic growth in the last calendar quarter of 2010 and in 2011, according to foodservice market research by The NPD Group, a leading market research company. NPD forecasts traffic to grow by +1 percent in the final quarter of 2010 and first quarter of 2011.
According to NPD’s CREST®, which continually tracks consumer usage of commercial and non-commercial foodservice outlets, customer traffic to commercial foodservice matched the year ago level, now about 4 percent below the third quarter (July, August, September) of 2008. Consumer spending at commercial foodservice nearly recovered from losses a year ago (up +2 percent versus a -2 percent decline) registering about the same volume level as the third quarter of 2008.
Visits to quick service restaurants, which represent the largest traffic share in the industry, were up by +1 percent in the third quarter. Casual dining and midscale full service restaurants continued to experience traffic declines. Casual dining visits were down -2 percent and traffic to midscale restaurants was down -3 percent.
“Some of the areas most affected by the recession have stopped declining or are starting to edge back up, like families with kids and non-deal visits,” says Bonnie Riggs, restaurant industry analyst at NPD. “These are positive signs that the industry is beginning to return to normalcy’, but high unemployment and the loss of benefits for the long-term unemployed, will keep the industry from full recovery .”
Unemployment has been highest among young adults, ages 18 to 34, historically the most frequent restaurant users. Since September 2008, the per capita restaurant visits for adults, ages 18 to 24, dropped from 236 to 215, and adults ages 25 to 34, declined from 256 to 235 visits. Consumers over age 50 tend to be lighter restaurant users, but they were more likely to hold onto their jobs during this recession and maintained their foodservice usage.
Unemployment also continues to adversely affect non-commercial foodservice traffic. According to NPD’s CREST OnSite®, which tracks usage of foodservice at business and industry, secondary schools, colleges and universities, hospitals, lodging, recreation, senior care, military, and vending segments, total non-commercial traffic is down -6 percent versus the third quarter in 2009, however, traffic losses have softened. The non-commercial sectors most affected by the economy and high unemployment, such as business and industry, vending, and recreation, posted the steepest declines.
“In spite of the visit declines, U.S. consumers still made 67 billion visits to commercial and non-commercial restaurants over the past year, and the industry will continue to work hard to provide their customers with the best quality, value, and convenience,” says Riggs. “In the end, there will be winners and losers who capitalize on the situation with innovative offerings that draw consumers out of their homes or away from competitors.”
Via The NPD Group, Inc.
12/7/10 – Fueled by improving same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) rose to its highest level in more than three years. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.7 in October, up 0.4 percent from September and strongest level since September 2007. In addition, the RPI stood above 100 for the second consecutive month, which signifies expansion in the index of key industry indicators.
“October’s RPI gain was driven by continued improvements in the same-store sales and customer traffic indicators,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Most notably, a majority of restaurant operators reported higher same-store sales in October, the first such occurrence since August 2007. As a result, the RPI’s Current Situation Index reached the 100 plateau for the first time in more than three years.”
“In addition to improving current situation indicators, restaurant operators are increasingly optimistic about sales growth in the coming months, and also reported a positive outlook for staffing levels for the first time in six months,” Riehle added.
Watch a video of Riehle providing an industry update, including the October RPI and outlook for the holiday season.
The RPI is constructed so that 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, and index values below 100 represent a period of contraction for key industry indicators. The RPI consists of two components, 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 100.0 in October – up 0.6 percent from September and its second consecutive solid gain. In addition, the Current Situation Index reached the 100 level for the first time since August 2007, which meant 37 consecutive months below 100 in the contraction range.
Restaurant operators reported a net increase in same-store sales for the second consecutive month in October. Fifty-one percent of restaurant operators reported a same-store sales gain between October 2009 and October 2010, up from 44 percent of operators in September and the first time since August 2007 that a majority of operators reported higher same-store sales. Meanwhile, only 33 percent of operators reported a same-store sales decline in October, down from 38 percent of operators who reported negative sales in September.
Restaurant operators also reported an increase in customer traffic levels in October. Forty-four percent of restaurant operators reported an increase in customer traffic between October 2009 and October 2010, up from 38 percent of operators who reported higher traffic in September. In comparison, 34 percent of operators reported a traffic decline in October, down from 37 percent in September.
While sales and traffic levels improved, capital spending activity remained relatively steady. Forty-two percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the past three months, matching the proportion of operators who reported similarly last month.
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 101.4 in October – up 0.3 percent from September and its strongest level in six months.
Restaurant operators remain solidly optimistic about sales growth in the months ahead. Forty-three percent of restaurant operators expect to have higher sales in six months (compared with the same period in the previous year), matching the proportion who reported similarly last month. Meanwhile, just 12 percent 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 slightly from 14 percent who reported similarly last month.
Restaurant operators also remain relatively optimistic about the direction of the overall economy. Thirty-five percent of restaurant operators said they expect economic conditions to improve in six months, down slightly from 38 percent last month. In comparison, only 12 percent of operators said they expect economic conditions to worsen in the next six months, down from 16 percent who reported similarly last month.
Along with a positive outlook for sales and the economy, restaurant operators’ plans for capital expenditures also remained solid. Forty-eight percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 47 percent who reported similarly last month and the strongest level in six months.
For the first time in six months, restaurant operators reported a positive outlook for staffing gains in the months ahead. Sixteen percent of operators expect to increase staffing levels in six months (compared with the same period in the previous year), and just 11 percent plan to reduce staffing levels in six months.
The RPI is based on the responses to the National Restaurant Association’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.
Via National Restaurant Association
11/11/10 -Restaurant visits from families or parties with kids increased this past summer after three years of traffic declines, according to The NPD Group, a leading market research company. NPD's foodservice market research reports that visits by parties with kids increased by 1 percent in the quarter ending August 2010 versus the same quarter a year ago.
"Although the visits increase reflect just one quarter, the return of parties with kids is another sign that business is beginning to pick up for the restaurant industry," said Bonnie Riggs, NPD's restaurant industry analyst. "Parties with kids are integral to the industry and make a significant contribution in both volume and sales."
According to NPD, last year, even with visits down, families or parties with kids accounted for 14 billion meals and snacks and $70 billion in sales.
Via The NPD Group, Inc.
11/2/10 -Driven by improving same-store sales and customer traffic levels, as well as growing optimism among restaurant operators, the outlook for the restaurant industry improved in September. The National Restaurant 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 100.3 in September, up a solid 0.8 percent from its August level.In addition, the RPI rose above 100 for the first time in five months, which signifies expansion in the index of key industry indicators.
"The RPI's solid gain in September was the result of broad-based improvements among both the current situation and forward-looking indicators," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association. "Restaurant operators reported positive same-store sales and customer traffic levels for the first time in six months, which propelled the RPI's Current Situation Index to its highest level in nearly three years."
"In addition, restaurant operators are more optimistic about sales growth in the months ahead, while their outlook for the economy rose to its strongest level in five months," Riehle added.
Watch a video of Riehle providing an industry update, including the RPI and holiday dining.
The RPI is constructed so that 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, and index values below 100 represent a period of contraction for key industry indicators. The RPI consists of two components, 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 99.4 in September – up 0.5 percent from August and its strongest level since October 2007. However, the Current Situation Index remained below 100 for the 37th consecutive month, as the softness in the labor and capital expenditure indicators outweighed the gains in same-store sales and customer traffic.
Restaurant operators reported a net increase in same-store sales for the first time in six months in September. Forty-four percent of restaurant operators reported a same-store sales gain between September 2009 and September 2010, up from 38 percent of operators who reported higher sales in August. Meanwhile, 38 percent of operators reported a same-store sales decline in September, down from 43 percent of operators who reported negative sales in August.
Restaurant operators also reported a slight uptick in customer traffic levels in September. Thirty-eight percent of restaurant operators reported an increase in customer traffic between September 2009 and September 2010, while 37 percent of operators reported a traffic decline. In August, 35 percent of operators reported an increase in customer traffic levels, while 42 percent reported a traffic decline.
Despite the improvements in sales and traffic levels, restaurant operators reported a slight dropoff in capital spending levels in recent months. Forty-two percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 44 percent of operators who reported similarly last month.
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 101.1 in September – up 1.0 percent from August and its strongest level in five months.
Restaurant operators are more optimistic about an improving sales environment in the months ahead Forty-three percent of restaurant operators expect to have higher sales in six months (compared with the same period in the previous year), up from 38 percent who reported similarly last month. In comparison, 14 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, compared with 17 percent who reported similarly last month.
Restaurant operators are also more bullish about the direction of the overall economy. Thirty-eight percent of restaurant operators said they expect economic conditions to improve in six months, up from 25 percent last month and the strongest level of optimism in five months. In comparison, just 16 percent of operators said they expect economic conditions to worsen in the next six months, down from 21 who reported similarly last month.
Along with an improving outlook for sales and the economy, restaurant operators' plans for capital expenditures also grew. Forty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 42 percent who reported similarly last month and the strongest level in five months.
The RPI is based on the responses to the National Restaurant Association'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 full report is available online.
Via the National Restaurant Association
9/30/10 – The National Restaurant Association hailed final passage of a bill in the U.S. House of Representatives that will provide the nation's restaurants and small businesses with tax relief and assistance in gaining access to capital. The House voted 237-187 this afternoon for the Small Business Jobs Act of 2010, H.R. 5297, which passed the Senate last week. President Obama is expected to sign the measure into law next week.
"This bill will help restaurants and small businesses with tax relief and assistance in gaining access to capital that is critical to economic and financial recovery," said National Restaurant Association Executive Vice President of Policy and Government Affairs Scott DeFife. "Our industry, employing nearly 13 million Americans at 945,000 restaurants locations nationwide, is comprised mainly of small, independent businesses."
"Households are still holding back on spending, and as a result many restaurant operators are continuing to struggle," added DeFife. "The provisions in this bill to expand access to capital will help restaurant operators make necessary investments, hire and retain workers, and, in certain cases, keep their doors open. The modernization of popular Small Business Administration loan programs, the inclusion of refinance options, and extension of expiring loan guarantees and borrower fee reductions will go a long way to help small businesses in this difficult credit climate."
Importantly, for 2010 and 2011 the legislation increases the Section 179 expensing limits to $500,000 and expands Section 179 to allow businesses to expense up to $250,000 of the cost of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.
"The expensing provisions will encourage restaurants to undertake capital expenditures, and these will have a multiplier effect, spurring economic activity and job growth in communities throughout the country," said DeFife, noting that the industry is forecast to generate an overall economic impact of $1.5 trillion this year.
The Small Business Jobs Act of 2010 includes the following beneficial provisions:
• Establishment of a $30 billion Small Business Lending Fund to spur and facilitate small banks in lending money to small businesses
• Increase in the size of Small Business Administration (SBA) loans from $2 million to $5 million
• Continued elimination of fees associated with such loans through 2010
• Continues 90 percent government guarantee of such loans through 2010
• Increase in the Section 179 expensing limits and expansion to cover restaurant property
Via The National Restaurant Association
8/26/10- U.S. Restaurant Traffic Will Grow Less Than Population Growth Over Next Decade, Reports NPD
Visits to U.S. restaurants are forecasted to grow less than one percent a year over the next decade, slower than the 1.1 percent a year growth in the country's population, according to recently released foodservice market research by The NPD Group, a leading market research company. The report, A Look into the Future of Foodservice, forecasts that annual visits to restaurants will increase by 8 percent over the next ten years.
The report, which provides forecasts of restaurant segments, categories, visit situations, and beverage and food products based on the aging of the U.S. population, population growth, and recent trends, finds that the aging of the U.S. population over the next decade will not benefit the restaurant industry.
"The aging effect on the restaurant industry will be slightly negative because of aging Baby Boomers," says Bonnie Riggs, NPD's restaurant industry analyst and author of A Look into the Future of Foodservice. "A greater share of visits will source to those 50 years and older in 2019, but as consumers age they become less frequent restaurant users. This means the restaurant industry will have heavier dependence on lighter buyers."
Trend momentum, which captures behavioral momentum based on the past nine years and includes such factors as new menu items, promotions, and restaurant openings and closings, has not been working in the industry's favor.
"In addition to being hit hard by the recession, Americans are eating more suppers at home, and fewer women entering the workforce have negatively impacted restaurant industry traffic," says Riggs. "The current trend momentum may not appear favorable for the industry moving forward, but it's the area where the industry has the greatest opportunity to change the direction of the forecast. There isn't much that can be done about the aging of the population and population growth."
She points out that the growth at the breakfast and PM Snack dayparts are examples of trends that present opportunities for the foodservice industry.
"Forecasts are something to be worked against, but are not cast in stone," says Riggs. "They are used to assess potential opportunities and risks for the purpose of long-term planning. The future course can be altered."
Via The NPD Group
8/3/10- Restaurant Performance Index (RPI) declined again in June, making it the third month in a row.
As a result of a dampened outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) declined for the third consecutive month in June. The RPI– a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.5 in June, down 0.3 percent from May and the lowest index level since February. In addition, the RPI stood below 100 for the second consecutive month, which signifies contraction in the index of key industry indicators.
“Although the current situation indicators registered a modest improvement in June, each of the four expectations indicators dipped for the second consecutive month,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Restaurant operators are generally optimistic that sales and business conditions will improve in the next six months, but the strength of their optimism fell to a five-month low.”
via the National Restaurant Association
6/10/09 – The National Restaurant Association’s comprehensive index of restaurant activity registered its fourth consecutive monthly gain again in April standing at 98.6, up 0.8 from March. The RPI (Restaurant Performance Index) is measured by the responses to the NRA’s Restaurant Industry Tracking Survey which focuses on sales, traffic, labor, and capital expenditures. Over 37 percent of restaurant operators are growing more optimistic regarding issues of the economy and are expecting a positive increase in sales growth within the next 6 months. Along with the expectations of increased sales, many operators are planning for capital expenditures with forty-six percent preparing for expansion or remodeling and for equipment. For a more detailed outline of the RPI, please visit www.restaurant.org.
