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Restaurant Index Shows Contraction, Less Capital Spending

Posted by WARREN MOSLER on October 30th, 2009

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

The restaurant business is still contracting …

Note: Any reading below 100 shows contraction for this index. The index is a year-over-year index, so the headline index might be slow to recognize a pickup in business, but the underlying details suggests ongoing weakness.

From the National Restaurant Association (NRA): Restaurant Industry Outlook Remained Uncertain as Restaurant Performance Index Declined in September for Second Consecutive Month

[T]he National Restaurant 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 97.5 in September, down 0.4 percent from August and its 23rd consecutive month below 100.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 96.0 in September – unchanged from August and tied for the second-lowest level on record. In addition, September represented the 25th consecutive month below 100, which signifies contraction in the current situation indicators.

The outlook for capital spending fell considerably from recent months. Thirty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down sharply from 45 percent who reported similarly last month.


2 Responses to “Restaurant Index Shows Contraction, Less Capital Spending”

  1. Matt Franko Says:

    This is one area I see that is being hit hard. Much of the problem with the mom&pop restaurants is the current price psf to the rentiers. Smart rentiers will offer a deal in advance (if they can) before the restaurants have to close. The restaurants that will stay in business are the ones offering value to their customers ie. $10.00 entrees and $2.00 drafts.


  2. Dave Begotka Says:

    My wife and I leased a restaurant in 2003, I ran my construction company during the day and cooked nights and weekends. I hope I am never that stupid again!

    I have friends in the business that have been doing it there whole life and everybody is way down on sales.

    More proof everybody’s credit cards are maxed! Americans eat with those things.


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