A recent survey by The National Restaurant Association revealed that the restaurant industry is still facing its toughest times and suggested that the grim outlook would continue unless the economy shows signs of rebound. Consumers are spending less and are dining out seldom.
Rising food and labor costs are eating away a major portion of the restaurant margins. Most companies have either scaled back plans for new units or postponed further unit development. Restaurants that operate in the casual dining segment, like Famous Dave’s of America (DAVE), Cosi Inc. (COSI), BJ’s Restaurants (BJRI), California Pizza Kitchen (CPKI) and Red Robin Gourmet Burgers (RRGB), are experiencing declining same-store sales and traffic counts.
The report has two parts:
1) Current Situation Index – measures comparable-store sales, traffic count, labor costs and capital expenditure for the month being surveyed compared to the same month in the last year.
2) Expectations Index – includes restaurant outlook on comparable sales, employees, capital expenditure and business environment.
These two indices consolidate to form the Restaurant Performance Index (RPI) – a monthly composite index that measures the health and outlook for the U.S. Restaurant Industry. An index of more than 100 would indicate that the restaurant industry is in an expanding phase, whereas below 100 would indicate that the industry is scaling back its development plans and is in a contracting mode.
Restaurant Performance Index for the month of May shows a value of 98.3, down 0.3% from April. The index has remained below 100 for 19 consecutive months. While Current Situation Index was 96.9, down 0.1% from April, the Expectations Index came in at 99.6, down 0.5% from April. The decline in Restaurant Performance Index reflects weak outlook for sales growth and capital spending.
The Current Situation Index highlights that restaurant operators have reported negative comps for the 12th consecutive month and negative traffic count for the 21st consecutive month.
The decline in the Expectations Index for May indicates the grim restaurant outlook – 29% of restaurant operators (down from 33% in April) expect higher 6-month sales, compared to the same period in the last year, whereas 33% of restaurant operators (up from 30% in April) expect their sales volume to be lower in 6 month compared to the year-ago period. The data suggests that the Restaurant Industry is still in a contracting phase.
Read the full analyst report on “DAVE”
Read the full analyst report on “COSI”
Read the full analyst report on “BJRI”
Read the full analyst report on “CPKI”
Read the full analyst report on “RRGB”
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