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National Restaurant Association Restaurant Performance Index by ces12174

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									                                                National Restaurant Association
                                Restaurant Performance Index – September 2008


NRA’s Restaurant Performance Index Fell                                                Restaurant Performance Index
1.7 Percent in September to Its Lowest
                                                                     104
Level on Record
The outlook for the restaurant industry worsened in                  103

September, as the National Restaurant Association’s
comprehensive index of restaurant activity fell to a new             102

record low. The Association’s Restaurant Performance
Index (RPI) – a monthly composite index that tracks the              101

health of and outlook for the U.S. restaurant industry – stood
at 96.7 in September, down 1.7 percent from August and its           100

11th consecutive month below 100.
                                                                     99

The September decline in the Restaurant Performance Index
was the result of broad-based declines across the index              98
components, with both the Current Situation and
Expectations indices falling to record lows. Nearly two out          97
of three restaurant operators reported negative same-store
sales and traffic levels in September, while 50 percent              96
expect their sales in six months to be lower than the same            Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08

period in the previous year.                                               Source: NRA; Values Greater than 100 = Expansion; Values Less than 100 = Contraction


The Restaurant Performance Index is based on the responses
to the Association’s Restaurant Industry Tracking Survey,                    Current Situation & Expectations Indices
which is fielded monthly among restaurant operators
nationwide. The index consists of two components – the               105

Current Situation Index and the Expectations Index.
                                                                     104

The Restaurant Performance Index is constructed so that the          103
health of the restaurant industry is measured in relation to a
steady-state level of 100. Index values above 100 indicate           102
that key industry indicators are in a period of expansion,
                                                                     101
while index values under 100 represent a period of
contraction for key industry indicators.                             100


Current Situation Index Fell 1.5 Percent in                          99
September to a Record Low Level of 96.4
                                                                     98
The Current Situation Index, which measures current trends
in four industry indicators (same-store sales, traffic, labor        97

and capital expenditures), stood at 96.4 in September – down
                                                                     96
1.5 percent from August and its lowest level on record. In            Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08
addition, September marked the 13th consecutive month
                                                                                        Current Situation Index                     Expectations Index
below 100, which signifies contraction in the current
situation component.                                                       Source: NRA; Values Greater than 100 = Expansion; Values Less than 100 = Contraction




National Restaurant Association                                  1                          Restaurant Performance Index – September 2008
Restaurant operators continued to report negative same-store               Restaurant Operators’ Reporting of Same-Store
sales, with September representing the worst result in more                  Sales versus Same Month in Previous Year
than five years. Twenty-six percent of restaurant operators
                                                                     70%
reported a same-store sales gain between September 2007                                                                                                                          60%
and September 2008, down from 38 percent who reported a              60%                                 55%                                 53%
sales gain in August. Sixty percent of operators reported a                      49%                                 50%                                 50%         48%
same-store sales decline in September, up from 48 percent            50%
                                                                                        44%                                43%
                                                                                                                                 42%
who reported similarly in August.                                    40%
                                                                                              39%
                                                                                                                                                               38%
                                                                            36%                                35%                                 36%
                                                                                                                                       32%
                                                                                                   28%
In addition to negative sales, September traffic levels              30%                                                                                                   26%
represented the weakest performance in the six-year history
of the RPI. Only 15 percent of restaurant operators reported         20%

an increase in customer traffic between September 2007 and           10%
September 2008, down from 25 percent who reported
similarly in August. Sixty-six percent of operators reported          0%
                                                                           Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08                               Jul-08      Aug-08 Sep-08
a traffic decline in September, up from 55 percent who
reported negative traffic in August.                                              Higher Same-Store Sales                                 Lower Same-Store Sales

                                                                      Source: National Restaurant Association, Restaurant Industry Tracking Survey
Along with weak sales and traffic levels, capital spending
activity remains extremely soft. Forty percent of operators             Restaurant Operators’ Outlook for Sales Volume in
said they made a capital expenditure for equipment,                      Six Months versus Same Period in Previous Year
expansion or remodeling during the last three months, which
equals the lowest level on record.                                   60%

                                                                                                                                                                                 50%
                                                                     50%
Expectations Index Plunged 1.9 Percent to a Level
of 97.0 in September                                                                                     38%                                 38%
                                                                     40%                                                         37%
                                                                                       34%                           34%                                 34%
The Expectations Index, which measures restaurant                           32%
                                                                                31% 30%    29%                 29%         29%         29%         29%         30%
                                                                                                                                                                     33%

operators’ six-month outlook for four industry indicators            30%

(same-store sales, employees, capital expenditures and
business conditions), stood at 97.0 in September – down 1.9          20%
                                                                                                                                                                           15%
percent from August and the lowest level on record. In
                                                                     10%
addition, September represented the 11th consecutive month
in which the Expectations Index stood below 100.
                                                                      0%
                                                                           Feb-08 Mar-08            Apr-08 May-08 Jun-08               Jul-08      Aug-08 Sep-08 Oct-08
Restaurant operators grew more pessimistic about sales                             Higher Sales in Six Months                            Lower Sales in Six Months
growth in coming months. Only 15 percent of restaurant
                                                                      Source: National Restaurant Association, Restaurant Industry Tracking Survey
operators expect to have higher sales in six months
(compared to the same period in the previous year), down
from 30 percent who reported similarly last month.                             Restaurant Operators’ Outlook for General
Meanwhile, 50 percent of operators expect their sales                             Economic Conditions in Six Months
volume in six months to be lower than it was during the
                                                                     60%
same period in the previous year, up from 33 percent who
reported similarly last month and the highest level on record.       50%
                                                                                                                                                                                 50%
                                                                                             46%                                 45%
                                                                                                         44%                                 43%
                                                                                                                     42%
Restaurant operators also remain decidedly pessimistic about         40%      37%
the direction of the economy. Fourteen percent of operators                                                                                                          33%
                                                                                                                                                         29%
expect economic conditions to improve in six months, down            30%
from 24 percent who reported similarly last month. Fifty                   21%                                                                     21%
                                                                                                                                                               24%

percent of operators said they expect economic conditions to         20%                           16%                                 15%
                                                                                       14%                     14%                                                         14%
worsen in six months, up sharply from 33 percent who                                                                       12%

reported similarly last month.                                       10%


Restaurant operators’ remain reticent to plan for capital            0%
                                                                           Feb-08 Mar-08           Apr-08      May-08 Jun-08           Jul-08      Aug-08 Sep-08 Oct-08
expenditures in the months ahead. Just 41 percent of
operators plan to make a capital expenditure for equipment,                 Better Conditions in Six Months                            Worse Conditions in Six Months

expansion or remodeling in the next six months, down from             Source: National Restaurant Association, Restaurant Industry Tracking Survey
43 percent last month and the lowest level on record.

National Restaurant Association                                  2                           Restaurant Performance Index – September 2008
             National Restaurant Association Restaurant Industry Performance Index and Its Components
                                                                                                                                                         Sep-08
                                         May                   June                  July                 August               September                  over
                                         2008                  2008                  2008                  2008                  2008                    Aug-08


Restaurant Performance Index              98.6                  98.3                  98.3                   98.3                  96.7                  -1.7%


Current Situation Index                   98.9                  97.9                  97.7                   97.8                  96.4                  -1.5%

Current Situation Indicators:
     Same-Store Sales                   100.1                   97.9                  98.6                   98.9                  96.6                  -2.4%
     Customer Traffic                     98.8                  96.3                  96.8                   97.0                  94.8                  -2.3%
     Labor                                97.8                  97.7                  96.8                   97.2                  96.2                  -1.1%
     Capital Expenditures                 98.8                  99.8                  98.5                   98.2                  98.0                  -0.2%


Expectations Index                        98.3                  98.6                  98.9                   98.8                  97.0                  -1.9%

Expectations Indicators:
     Same-Store Sales                     99.2                  99.1                  99.6                   99.7                  96.5                  -3.2%
     Staffing                             98.7                  98.6                  98.1                   98.1                  96.5                  -3.2%
     Capital Expenditures                 98.6                  99.5                  98.7                   98.5                  98.2                  -0.3%
     Business Conditions                  96.7                  97.2                  99.3                   99.1                  96.4                  -2.7%

Note: For each of the Indices and Indicators, a value above 100 signals a period of expansion while a value under 100 signals a period of contraction.




                                                                               Definitions
The National Restaurant Association’s Restaurant Performance Index is a statistical barometer that measures the overall health of
the U.S. Restaurant Industry. This monthly composite index is based on the responses to the National Restaurant Association’s
monthly Restaurant Industry Tracking Survey, which is fielded among restaurant operators nationwide on a variety of indicators
including sales, traffic, labor and capital expenditures. The Restaurant Performance Index is composed of two equally-weighted
components: the Current Situation Index and the Expectations Index. For each of the Indices and Indicators, a value above 100
signals a period of expansion while a value under 100 signals a period of contraction.

The Current Situation Index is a composite index based on four ‘recent-period’ restaurant industry indicators:
    Same-Store Sales: Compares same-store sales volume in the reference month versus the same month in the previous year
    Customer Traffic: Compares customer traffic in the reference month versus the same month in the previous year
    Labor: Compares the number of employees and the average employee hours in the reference month versus the same month
            in the previous year
    Capital Expenditures: Measures capital expenditure activity during the three most recent months

The Expectations Index is a composite index based on four ‘forward-looking’ restaurant industry indicators:
    Same-Store Sales: Restaurant operators’ outlook for same-store sales in six months, compared to the same period in the
                        previous year
    Staffing: Restaurant operators’ expectations for their number of employees in six months, compared to the same period in
              the previous year
    Capital Expenditures: Restaurant operators’ capital expenditure plans during the next six months
    Business Conditions: Restaurant operators’ outlook for general business conditions during the next six months


For a complete analysis of the National Restaurant Association’s Restaurant Industry Tracking Survey including data broken out
by industry segment, as well as a host of other economic indicators that impact the restaurant industry, log on to Restaurant
TrendMapper at www.restaurant.org/trendmapper (subscription required).



National Restaurant Association                                               3                       Restaurant Performance Index – September 2008

								
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