Restaurant Traffic Steady

Two recent reports indicate restaurant traffic is steadying, though the outlook is mixed.

Due in part to a dampened outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a modest decline in July. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – was down for the second consecutive month.

Restaurant Industry Research and Reports on Traffic

“Although restaurant operators reported positive same-store sales and customer traffic results in July, the RPI edged down as a result of a mixed outlook for the months ahead,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Restaurant operators were less bullish about the direction of the overall economy, and rising wholesale food costs are once again starting to pose a significant challenge.”
Overall, however, the results were more positive than negative, the NRA reported. For the fifth consecutive month, a majority of restaurant operators reported higher same-store sales. Fifty-four percent of restaurant operators reported a same-store sales gain between July 2013 and July 2014, while 30 percent reported a sales decline. In June, 55 percent reported higher same-store sales, while 27 percent reported lower sales.   
Restaurant operators also reported positive customer traffic results in July. Forty-one percent reported an increase in customer traffic levels between July 2013 and July 2014, while 34 percent reported lower traffic levels. In June, 39 percent said their customer traffic levels rose, while 41 percent reported a decline.
Meanwhile, the research firm GuestMetrics reported restaurant traffic turns positive for first time this year as consumer spending picks up. The firm reported traffic turned positive for the first time this year in the 4 weeks ending 8/10. Full service restaurant/bar traffic was up +0.3% versus down 1.2% YTD (with sales up +3% during the 4 weeks versus +1.6% YTD). "This is a clear indication that consumer spending is finally picking up in what is historically one of the most economically sensitive spending categories," said the firm in a release.

Traffic to casual dining restaurants was up +0.5% versus down 1% YTD (with sales up +3.2% during the 4 weeks versus sales up +1.7% YTD) - the best performance the firm has reported this year. Bar/club traffic was down 0.5% vs down 2.2% YTD, attributed last month to the benefits of the World Cup, but the firm said it was "quite encouraging to see the follow through post World Cup indicating there is an improvement in general consumer spending taking hold." Traffic to fine dining restaurants was up +0.2% vs down 2% YTD (with sales up +2.3% during the 4 weeks versus up +0.5% YTD). Hotels also improved with traffic essentially flat during the 4 weeks versus down 0.3% YTD but recovering from a 1.5-2.5% traffic drop during June/July.