National Restaurant Association Restaurant Performance Index - July by ces12174

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									                                                National Restaurant Association
                                             Restaurant Performance Index – July 2008


NRA’s Restaurant Performance Index Was                                                 Restaurant Performance Index
Unchanged in July; Remained Below 100
for the 9th Consecutive Month
                                                                     104



Restaurant industry performance remained sluggish in July,           103
as the National Restaurant Association’s comprehensive
index of restaurant activity stood below 100 for the ninth           102
consecutive month. The Association’s Restaurant
Performance Index (RPI) – a monthly composite index that
tracks the health of and outlook for the U.S. restaurant             101

industry – stood at 98.3 in July, unchanged from its June
level.                                                               100


The lack of change in July’s Restaurant Performance Index            99
was the result of an off-setting decline in the current
situation component and gain in the expectations
                                                                     98
component. Restaurant operators reported negative same-
store sales for the seventh time in the last nine months, with
customer traffic levels also remaining below year-ago levels.        97
The sluggish economy topped the list of challenges reported           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

by restaurant operators, with 25 percent of operators                      Source: NRA; Values Greater than 100 = Expansion; Values Less than 100 = Contraction
identifying the economy as their top challenge.

The Restaurant Performance Index is based on the responses                   Current Situation & Expectations Indices
to the Association’s Restaurant Industry Tracking Survey,
which is fielded monthly among restaurant operators                  105

nationwide. The index consists of two components – the
                                                                     104
Current Situation Index and the Expectations Index.
                                                                     103
The Restaurant Performance Index is constructed so that the
health of the restaurant industry is measured in relation to a       102
steady-state level of 100. Index values above 100 indicate
                                                                     101
that key industry indicators are in a period of expansion,
while index values under 100 represent a period of                   100
contraction for key industry indicators.
                                                                     99
Current Situation Index Declined 0.2 Percent in
                                                                     98
July to a Level of 97.7
The Current Situation Index, which measures current trends           97

in four industry indicators (same-store sales, traffic, labor
                                                                     96
and capital expenditures), stood at 97.7 in July – down 0.2           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
percent from June and its second consecutive monthly
                                                                                        Current Situation Index                     Expectations Index
decline. July also marked the 11th consecutive month below
100, which signifies contraction in the current situation                  Source: NRA; Values Greater than 100 = Expansion; Values Less than 100 = Contraction

component.



National Restaurant Association                                  1                                   Restaurant Performance Index – July 2008
Restaurant operators reported a same-store sales decline in               Restaurant Operators’ Reporting of Same-Store
July, though results were somewhat better than June. Thirty-                Sales versus Same Month in Previous Year
six percent of restaurant operators reported a same-store
                                                                    60%
sales gain between July 2007 and July 2008, up from 32                                                                           55%
                                                                                                                                                                     53%
percent who reported a sales gain in June. Fifty percent of         50%
                                                                                            49%          49%                                 50%                                 50%

operators reported a same-store sales decline in July, down                      44%                           44%                                 43% 42%
                                                                                                                      39%
from 53 percent who reported similarly in June.                     40%
                                                                          40%
                                                                                                   36%                                                                     36%
                                                                                      33%                                              35%
                                                                                                                                                               32%
In addition to sluggish sales results, operators continued to       30%                                                    28%
report negative customer traffic levels in July. Twenty-five
percent of operators reported an increase in customer traffic       20%
between July 2007 and July 2008, up from 21 percent who
reported similarly in June. Fifty-seven percent of operators        10%
reported a traffic decline in July, down slightly from 58
percent who reported negative traffic in June.                       0%
                                                                          Nov-07 Dec-07 Jan-08 Feb-08 Mar-08                           Apr-08 May-08 Jun-08                Jul-08

Restaurant operators also reported a dropoff in capital                           Higher Same-Store Sales                                 Lower Same-Store Sales

spending activity. Forty-two percent of operators said they          Source: National Restaurant Association, Restaurant Industry Tracking Survey
made a capital expenditure for equipment, expansion or
remodeling during the last three months, down from 49                  Restaurant Operators’ Outlook for Sales Volume in
percent who reported similarly last month.                              Six Months versus Same Period in Previous Year
Expectations Index Rose 0.3 Percent to Reach a                      40%                                                          38%                     37%         38%

Level of 98.9 in July                                                                              32%
                                                                                                                     34%                     34%                                 34%
                                                                                       31%               31%
                                                                           29%               30%               30%         29%         29%         29%         29%         29%
The Expectations Index, which measures restaurant                   30%       28%
operators’ six-month outlook for four industry indicators
(same-store sales, employees, capital expenditures and
business conditions), stood at 98.9 in July – up 0.3 percent        20%

from June and its second consecutive monthly gain.
However, July represented the ninth consecutive month in
                                                                    10%
which the Expectations Index stood below 100.

Restaurant operators remain uncertain about sales growth in
                                                                     0%
coming months. Twenty-nine percent of restaurant                          Dec-07 Jan-08 Feb-08 Mar-08                       Apr-08 May-08 Jun-08               Jul-08      Aug-08
operators expect to have higher sales in six months                               Higher Sales in Six Months                             Lower Sales in Six Months
(compared to the same period in the previous year),
                                                                     Source: National Restaurant Association, Restaurant Industry Tracking Survey
matching the proportion who reported similarly in each of
the previous four months. Thirty-four percent of operators
expect their sales volume in six months to be lower than it                     Restaurant Operators’ Outlook for General
was during the same period in the previous year, down from                         Economic Conditions in Six Months
38 percent who reported similarly last month.
                                                                    50%                                              46%
                                                                                            44%                                                          45%
                                                                                                                                 44%                                 43%
                                                                                                                                             42%
Restaurant operators also remain relatively pessimistic about                   41%

the direction of the economy, though their sentiment was            40%                                 37%

greatly improved from recent months. Twenty-one percent                                                                                                                          29%
of operators expect economic conditions to improve in six           30%
months, up from 15 percent who reported similarly last                                            21%                                                                      21%
month and the highest level in six months. Twenty-nine              20%
                                                                          16%         16%                                  16%
percent of operators said they expect economic conditions to                                                   14%                     14%
                                                                                                                                                   12%
                                                                                                                                                               15%

worsen in six months, down sharply from 43 percent who
                                                                    10%
reported similarly last month.

Restaurant operators’ outlook for capital spending activity         0%
                                                                          Dec-07 Jan-08 Feb-08                 Mar-08      Apr-08      May-08 Jun-08           Jul-08      Aug-08
softened somewhat. Forty-three percent of operators plan to
make a capital expenditure for equipment, expansion or                     Better Conditions in Six Months                             Worse Conditions in Six Months

remodeling in the next six months, down from 47 percent              Source: National Restaurant Association, Restaurant Industry Tracking Survey
last month and matching the lowest level on record.

National Restaurant Association                                 2                                       Restaurant Performance Index – July 2008
             National Restaurant Association Restaurant Industry Performance Index and Its Components
                                                                                                                                                         July-08
                                        March                  April                 May                    June                  July                     over
                                        2008                   2008                  2008                   2008                  2008                   June-08


Restaurant Performance Index              97.9                  98.4                  98.6                   98.3                  98.3                   0.0%


Current Situation Index                   97.1                  97.9                  98.9                   97.9                  97.7                  -0.2%

Current Situation Indicators:
     Same-Store Sales                     97.3                  98.5                 100.1                   97.9                  98.6                   0.7%
     Customer Traffic                     95.9                  96.9                  98.8                   96.3                  96.8                   0.5%
     Labor                                97.1                  97.4                  97.8                   97.7                  96.8                  -0.9%
     Capital Expenditures                 98.2                  98.6                  98.8                   99.8                  98.5                  -1.3%


Expectations Index                        98.8                  98.9                  98.3                   98.6                  98.9                   0.3%

Expectations Indicators:
     Same-Store Sales                     99.1                  99.5                  99.2                   99.1                  99.6                   0.4%
     Staffing                             99.3                  99.4                  98.7                   98.6                  98.1                  -0.5%
     Capital Expenditures                 99.5                  99.5                  98.6                   99.5                  98.7                  -0.8%
     Business Conditions                  97.2                  97.2                  96.7                   97.2                  99.3                   2.1%

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 – July 2008

								
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