Dining St. Louis
Restaurant News
January, 2009
St. Louis Restaurant Guide to fine dining establishments with news about restaurant openings and special events. Restaurants are listed by area for your convenience.
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Dining St. Louis: Special Spotlight
Restaurant Operators More Pessimistic About Sales Growth in Coming Months
ST. LOUIS, MO, (PRNewswire-USNewswire), January 1, 2009 - The outlook for the restaurant industry worsened in November, as the National Restaurant Association's comprehensive index of restaurant activity fell to a record-low level. The Association's Restaurant Performance Index (RPI) -- a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry -- stood at 96.7 in November, down 0.4 percent from October and its 13th consecutive month below 100.
"The November decline in the Restaurant Performance Index was the result of broad-based declines across the index components, with the Current Situation index falling to a new record low," said Hudson Riehle, senior vice president of Research and Information Services for the Association. "A solid majority of restaurant operators reported negative same-store sales and traffic levels in November, while nearly one-half expect their sales in six months to be lower than the same period in the previous year."
"The continued deterioration in economic conditions is reflected in operator sentiment, with a record 47 percent of restaurant operators saying the economy is currently the number-one challenge facing their business," Riehle added. "Looking forward, restaurant operators aren't particularly optimistic about an improvement either, with 49 percent expecting economic conditions to worsen in six months."
The Restaurant Performance Index is based on the responses to the National Restaurant Association's Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. The Index consists of two components -- the Current Situation Index and the Expectations Index.
The Restaurant Performance Index is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators.
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 96.2 in November -- down 0.3 percent from October and its lowest level on record. In addition, November marked the 15th consecutive month below 100, which signifies contraction in the current situation component.
Restaurant operators reported negative same-store sales for the sixth consecutive month in November. Twenty-six percent of restaurant operators reported a same-store sales gain between November 2007 and November 2008, down from 29 percent who reported a sales gain in October. Sixty percent of operators reported a same-store sales decline in November, matching the proportion who reported negative sales in both September and October.
Customer traffic levels also remained negative in November. Eighteen percent of restaurant operators reported an increase in customer traffic between November 2007 and November 2008, down slightly from 20 percent who reported similarly in October. Sixty-five percent of operators reported a traffic decline in November, matching the proportion who reported negative traffic in October.
Along with weak sales and traffic levels, capital spending activity remains extremely soft. Thirty-nine percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which equals the lowest level on record.
The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 97.1 in November -- down 0.5 percent from October and just slightly above the record-low level of 97.0 registered in September. In addition, November represented the 13th consecutive month in which the Expectations Index stood below 100.
Restaurant operators are more pessimistic about sales growth in coming months. Only 21 percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), matching the proportion who reported similarly last month. However, 48 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, up from 43 percent who reported similarly last month and one of the highest levels on record.
Restaurant operators are also more uncertain about the direction of the economy. Seventeen percent of operators expect economic conditions to improve in six months, down slightly from 18 percent who reported similarly last month. Forty-nine percent of operators said they expect economic conditions to worsen in six months, up from 40 percent who reported similarly last month.
Restaurant operators remain reticent to plan for capital expenditures in the months ahead. Forty percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 37 percent who reported similarly last month.
Archived St. Louis Fine Restaurant News:
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