Sales And Traffic Slowed In April, NRA Reports

Higher gasoline prices and softening jobs growth earlier this spring finally caught up with consumer spending at restaurants, according to the National Restaurant Association. The group’s monthly Restaurant Performance Index data on current same-store sales and customer traffic took strong hits in April, though both remained in positive territory. And operators remained optimistic about future sales and business conditions. They were less positive about their current and future capital spending.

The overall index lost 0.6 point to finish April at 101.6, well above the 100 point that separates expansion from contraction. It was the sixth consecutive month the index has been in expansion territory. Seven of the index’s eight components continued above the 100 tipping point. The outlier: current capital spending, which has never nosed above 100 since falling into contraction territory in November 2007. The March ’12 reading of 99.6 was the highest data point the indicator had achieved since then.

The four-component Current Situation Index fell a full point to 101, pushed down by a 1.5-point drop in the traffic marker and a 1.1 decline in that for current same-store sales. The labor component fell 0.4 point and the cap-ex indicator, a reflection of operators that made a capital buy during the past three months, was off 0.9 point.

The Expectations Index, also incorporating four components, declined only slight by 0.2 point to 102.2. The six-month outlook for same-store sales and staffing both rose 0.1 point, while operators’ view of business conditions in six month dropped only 0.1 point. The indicator for capital spending plans over the next six months fell 0.8 point, but remained above the tipping point at 100.3.

Data from other sources with an early read on May activity, such as Black Box Intelligence, seem to indicate the slowing of sales and traffic continued last month. The NPD Group, which last week reported strong restaurant traffic gains early in the year, said it expects traffic to slow compared to those gains for the remainder of this year. In other words, the recovery of the foodservice market at the operator level continues, but at a frustratingly slow pace.