Friday, May 28, 2010

Restaurant Index: Same store sales and customer traffic off in April

by Bill McBride on 5/28/2010 12:41:00 PM

This is one of several industry specific indexes I track each month.

Restaurant Performance Index Click on graph for larger image in new window.

Same store sales and customer traffic both showed declines in April. This was more than offset by a postive outlook in the "expectations index" and the overall index showed expansion in April.

Unfortunately the data for this index only goes back to 2002.

Note: Any reading above 100 shows expansion for this index.

From the National Restaurant Association (NRA): Restaurant Industry Outlook Remained Positive as the Restaurant Performance Index Stood Above 100 in April

[T]the National Restaurant Association’s Restaurant Performance Index (RPI) ... was essentially unchanged from its previous month’s level; the RPI stood at 100.4 in April, down slightly from its March level of 100.5. RPI levels above 100 indicate expansion of key industry indicators.

Although the sales and traffic indicators softened somewhat from their March performance, restaurant operators remain optimistic that business conditions will improve in the months ahead,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, restaurant operators reported a positive outlook for staffing gains, as well as continued plans for capital expenditures in the coming months.”
...
After reporting net positive same-store sales in March for the first time in 22 months, restaurant operators reported softer sales results in April.
...
Similarly, restaurant operators reported a net decline in customer traffic levels in April, after posting positive traffic results in March.
emphasis added
Restaurants are a discretionary expense, and they tend to be 'first in, last out' of a recession for consumer spending (as opposed to housing that is usually first in and first out). So far the recovery for restaurants has been sluggish, and operators will only stay optimistic if sales and traffic picks up.