Restaurant Industry In Gloom As Number Of Americans Eating Out Tumbles

Tyler Durden's picture

While the latest government retail spending data shows that while it is slowing down, consumer spending on "eating out" or retail and food service sales, hasn't posted a sharp deterioration, secondary tracking sources beg to differ. A far more accurate tracker of real-time US Restaurant sales, that of the National Restaurant Association's Restaurant performance index, paints a far more disturbing picture.

As the Natl Restaurant Association reports for its latest data, August restaurant sales tumbled in August, sliding to the lowest level since the financial crisis. As the restaurant association reports, due in large part to declines in both same-store sales and customer traffic, the National Restaurant Association’s Restaurant Performance Index (RPI) fell below 100 in August. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.6 in August, down 1.0 percent from a level of 100.6 in July.

Restaurant operators reported net declines in both same-store sales and customer traffic in August, along with corresponding dips in the labor indicators. The RPI 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 98.6 in August – down 1.9 percent from a level of 100.4 in July. The August reading below 100 signifies contraction in the current situation indicators, and represented the the lowest

The details were just as troubling:

After three consecutive months of mixed results, restaurant operators’ reporting of same-store sales took a downward turn in August. Only 30 percent of restaurant operators reported a same-store sales increase between August 2015 and August 2016, while 53 percent reported a sales decline. During the previous three months, similar proportions of restaurant operators reported higher and lower same-store sales. Similarly, restaurant operators reported a net decline in customer traffic in August. Only 21 percent of restaurant operators reported an increase in customer traffic between August 2015 and August 2016, while 59 percent reported a traffic decline. August represented the fourth consecutive month in which restaurant operators reported a net decline in customer traffic.

Along with softer sales results, restaurant operators’ outlook for future business also dampened somewhat in recent months. Thirty-three percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 30 percent who reported similarly last month. Eighteen 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, down from 21 percent last month.

Meanwhile, restaurant operators are not as optimistic about the overall economy. Only 17 percent of restaurant operators said they expect economic conditions to improve in six months, while 29 percent said they expect conditions to worsen. This represented the 10th consecutive month in which restaurant operators had a net negative outlook for the economy.

However, the pain did not end in August. According to the Knapp-Track index, casual dining same store sales were down 1.9% in September with guest counts down 4.2% showing sequential deterioration from July and August with the second worse monthly performance of 2016 with only June results softer.

As Bank of America reports, Knapp attributes the industry’s sales weakness mostly to pent-up spending on high ticket items siphoning off consumers’ cash away from every day purchases such as dining out but also to anxiety and distraction related to the raucous Presidential election.

One reason for the slowdown may be food inflation. Check average for Knapp-Track casual dining was up 2.3% in Sept. driven by in part by pricing but also likely by low income customers dining out less which can skew checks higher as demographics move to higher spending customers. This confirms that any food inflation trends are unlikely to persist as a result of the broader decling in sales forcing operators to once again cut prices to regain market share.

Knapp expects the allocation of spending to high ticket items to continue through the 1Q of next year. While Knapp expects business spending to pick up after the election, consumer anxiety may persist because of a polarization of political views with neither candidate popular with most Americans.

Regionally, Knapp noted that Texas same store sales remain especially soft as the weakest of 11 Knapp Track regions with the gap versus the national average widening in August (latest available regional data) to 270 bps which means Texas comps were down 3.7% versus overall Knapp-Track down 1%. In July, the gap was 150 bps with Texas down 2% versus Knapp-Track down 0.5%. Sales in the Dallas market are better than Houston and energy dominated market sales are weaker yet. Separately, Denver is also soft with August comps down 2.5%. California remains the strongest Knapp-Track region.

Whatever is the cause behind the adverse pressure in restaurant food trends, it does not appear to be going away, and in fact is deteriorating with every month. We expect this trend to deteriorate substantially in the near future, as a result of the November 1 Obamacare "price shock" which is expected to send the cost of health insurance across the nation by double digits, eliminating even more discretionary income from Americans' pockets.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
cheka's picture

is this a factor?

grocery stores in my area are selling more cooked food now - so that the fsa can use their foodstamps there and not be hassled with having to cook the free food.  in tx, foodtamps cannot be used at restaurants.  heb, kroger, and the rest are taking care of that problem

Dineroguru's picture

There can be substantial savings on taxes (especially in the big cities) and also no tip required.  Add those two together and it is >20% added to a normal dinner out-- saving the cost of drinks which are cheap at home  and dear at the restaurant...

Motasaurus's picture

Less americans eating out, and yet there's more lesbians than ever?

Something doesn't add up. 

debtor of last resort's picture

Whaha, it's called email dumps nowadays.

jbvtme's picture

problems with restaurants: giving some goat a 20% tip for walking your food 50' to your table, paying double for a bottle of wine, guessing where the food on your plate came from, listening to the conversation at the table next to you about the perils of having your gallbladder removed...

spanish inquisition's picture

If you tip in Europe they know your an American.

JamesBond's picture

Who believes this matters to the elites who have catered dinners?

Clue -  It doesn't.  Buy on credit, consume, buy more on credit.  You are a slave.

Trump is not going to be allowed to stop this 'forced' servitude to the fascist state of the USA>

 

 

jb

TeamDepends's picture

The elite feast on humans, so once again, they are set up real nice.

Creative_Destruct's picture

So the biggest "employment driver" in the grand "advanced" US economy will go from being serviced while eating chicken to being serviced while eating what "tastes like chicken."

philipat's picture

Hey Loftie, previously known as mofio then santafe then Aristotle of Greece then Gargoyle then bleu then oops then lance-a-lot and others. Lance-a-lot got banned very quickly so time to re-use another old persona (non grata)?

You are a serial spammer and a serial pain in the ass. Might I politely suggest that you go fuck yourself? And get a life.

PS. You might have noticed that my attempt to expose you for what you are is always the same. That’s because your Spam is always the same (Using fake links to your BS site which has no connection to your comments, which are deliberately dramatic to encourage people to click on the fake link) so it seems only fair that my exposure of your crap should also always be the same. An eye for an eye.

HamFistedIdiot's picture

philipat - Thanks for smoking this guy out. Not everyone else cares enough to put in the time. I am not sure that public shaming will help. Maybe another ban is in order? 

stocker84's picture

Why is it so complicated for you guys?

In Australia, servers make like$18 an hour? 

No tips. Samich, with chips(what they call French fries) and a soda $18..

What you fail to realize is it the people didn't tip, the hourly wage would go from something like$3 an hour to $15 and then your food costs would go up the wazoo.

In other words, 6 of one, half a dozen of the other.

15% if it's normal...%20 if it's exceptional.

12% if it sucks.

Stiff if it is complete incompetence.

In other words, you set the price.

And it's OK to write on the check, you didn't bring us water when we asked so here's your 12%

Notice they give you the cold shoulder the entire meal and when they bring the check it's all smiles and fake warmth. 

 

Bernardo Gui's picture

In Seattle, where the local minimum wage is $15, the restaurants add the cost directly to the check as a service charge.  So, when you tip it is on top of the service charge. 

max2205's picture

People finally found the great DIY meals on YouTube for 75% less..?   About time 

Sofa King's picture

Restuarants suck hairy bean-bags.

This scene is killer, it puts it all out there. Take from it what you will.

https://youtu.be/cmcMSEofjU8

debtor of last resort's picture

Problem with restaurants is that you motherfucker Americans call it McDonalds.

Fisherman Blue's picture

No tipping in Japan and service is much mich better. So is the food.

LadiesLoveCoolJames's picture

Oh the horror! Fatty McSweatpants may lose a few pounds. I hope their digestive systems haven't evolved to only process fried shit foods.

Motasaurus's picture

Perhaps its regional, but where I am from "eating out" is the term used for female on female oral sex.

stocker84's picture

It also means to eat food at a restaurant... More so than your prepubescent mind thinks it's the other way around.

Can you do us a favor and stop surfing porn while you post, pervert.

What a clown...der it means lesbian... Chuckle chuckle tee hee.

It means, woman eating vag, giggle giggle .

Stupid little jerk off

 

booboo's picture

What pisses me off is restaurants upped the "suggested tip" on the bill to 22%. on another note back in the 70's most restaurant menus looked like hell with all of the price changes as inflation really kicked in, of course not many higher end places were around, usually local diners. But with all of the corporate owned places stuffed into these town center type places ithey will be slaughtered.

blargg's picture

Also eating out takes a lot of time.

mophead's picture

"There can be substantial savings on taxes"

Which goes to show: many ZH'ers are rebels without a clue. All hot foods are taxable.

slaughterer's picture

My parents asked me to send them some money so that they can eat out at Applebee's on Christmas in South West Florida.  

booboo's picture

Man, that's so sad, my heart goes out to them.

gmrpeabody's picture

I hope you don't do it.., (tough love)

AtATrESICI's picture

that is sad, in a do not have the money sort of way.

 

 

sooner or later we may all find outselves residing in shattered glass houses in hillaryvilles. if anywhere at all. 

Offthebeach's picture

Don't thow your money away, save. There are free rides to the Salvation Army Christmas Dinner.

Stroke's picture

Down 1%.......OMG what a story!!

nightwish's picture

Meanwhile the canned food index and shotgun sales have skyrocketed. 

MSM's constant vitriol makes everyone sick to the point of losing their appetites. People are preparing for the coming pandemonium instead of dining out.

I am Jobe's picture

Most of the fatsos in TX can afford to go without food for month or longer.  Lived in Austin, fuck the amount of food places people stuffing their face.  

Hitlery_4_Dictator's picture

Austin is a world class shit hole. Glad I moved. Texas is nice, but you have to make good educated decisions on where to go. Tip: Don't follow the masses. 

cheka's picture

austin, san antonio, dallas, houston = all globalist hellholes

Delving Eye's picture

Funny, I've heard just the opposite -- Texas is a world-class shithole, but Austin is nice. Ony problem with Austin is once you leave, you're still in Texas.

Hitlery_4_Dictator's picture

See, you've only heard. I've lived it.  Big difference. Also, I like being as free as possible, not many places left to go. Texas is about as good as you can get, while trying to make a living. 

francis scott falseflag's picture

 

Stores like that don't throw food away anymore.  they cook it and sell it.

 

Keep away from the beef stew.

Katos's picture

You have a mandatory health insurance premium or a large fine for not buying it?  If you can't afford to eat because of it,  we'll, that's just tough shit!

rockstone's picture

I have family in the grocery business. It's the only reason some chains have prepared foods.

mophead's picture

"grocery stores in my area are selling more cooked food now"

Which goes to show, many of the ZH'ers are rebels with out a clue. You can't buy hot foods with food stamps

2thepeople's picture

I dont know....lines out the doors of cheesecake factory and bw3 on fri and sat here in socal. Must be adding to those credit card balances

thamnosma's picture

I do think that is exactly what is happening -- adding to the CC balances.  People aren't buying RVs and other expensive toys, they can't "refi" bloating housing to live like fake royalty anymore.  So what's affordable fun?  Restaurants,  Cheesecake Factory, crap like that.  Cheap socialization.  Can't afford $200 to watch a baseball game, or even go do the damn movies, which suck anyway.   I figure certain popular restaurants will do just fine during the worst of depressions.

Ralph Spoilsport's picture

The big chains are suffering everywhere I travel (Chik-Fil-A is an exception). Local restaurants with a good word of mouth reputation are doing fine. There aren't that many of those so they don't affect the statistics very much. Local pizzerias that serve draft beer are doing really well.

rockstone's picture

You simply cannot beat a good local pizzeria w cold draft beer and/or a decent dago red.

College age waitresses preferred.

Woodrox's picture

May i never see the inside of a cheesecake factory