Operator Optimism Dropped Sharply In September, Says NRA

Restaurant operators can’t seem to figure whether they are happy or sad these days. After a strong full-point gain in the National Restaurant Association’s Restaurant Performance Index in August, the index fell back 0.9 point in September as seven of the index’s eight components moved lower. Both capital-spending indicators fell sharply. The reading is surprising, given an economic climate that should favor growth in restaurant sales. Still, at 101, the overall index has stood above 100 for 19 consecutive months.

The Current Situation Index fell 0.8 point to 101 as all components declined except same-store sales, which was flat at a very elevated 104. The customer-traffic component fell 0.7 point, and the indicator tracking labor counts and hours was off 0.4 point.

The operators surveyed were significantly less optimistic than in August. The Expectations Index dropped 1.1 points to 100.9. The staffing- and future-business-conditions outlooks both fell 1.3 points, while the outlook for same-stores sales fell 0.7 point.

Operators sharply cut back on capital spending in September. The marker tracking those that made a capital buy fell 1.9 point and finished at 99.8, under the 100 level that signals expansion vs. contraction. The percentage making a purchase in the past three months fell to 49% from 59% in the August survey. The indicator for those planning a capital purchase in the next six months fell 1.2 point to 100.7 as 53% said they plan to make a purchase, down from 59% in August.

The downbeat September RPI is actually a bit of a surprise. The macroeconomic fundamentals—continuing employment growth, consumer confidence at post-recession highs and dramatically falling gasoline prices—favors increased foodservice spending. But operators also are dealing with increased food and labor costs in an environment that has seen little or no growth in traffic counts.

The full NRA RPI can be viewed at restaurant.org. “””