Declining customer traffic and mixed same-store sales contributed to the restaurant industry’s slowdown in July, according to the latest Restaurant Performance Index from the National Restaurant Association.
The monthly index measures the overall health of the restaurant industry. Any value above 100 indicates the industry is in a period of expansion while numbers below 100 indicate contraction. The index fell by 0.5 percent in July, standing at 100.8.
Operators reported a decline in customer traffic for the second straight month. July marked the first time in 17 months that a majority of restaurant operators did not report higher year-over-year same-store sales. Only 45 percent of respondents reported improved sales between July 2021 and July 2022, down from 64 percent in June. Further, 47 percent of operators said sales were lower in July, up from 22 percent the previous month. Customer traffic numbers fared even worse. Only 26 percent of operators said customer traffic rose year-over-year in July while 58 percent said traffic was down.
The disappointing customer traffic and sales results do have operators worried about the future. Only 35 percent said they expect their sales volume to be higher in six months than the previous year, the lowest reading in nearly two years. Despite these lowered expectations, operators are still planning to invest in their locations. Sixty-seven percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months – the seventh consecutive month with readings of at least 60 percent. What’s more, 67 percent also said they plan to make a capital expenditure in the next six months, an increase from 62 percent in June and the 18th straight month above 55 percent.