Restaurateur outlook approaching par


Many economic experts agree that consumer spending will ultimately drive the recovery from the current recession. And the more consumers are worried about their own supply of cash, the more they eat at home. That’s why we liked seeing a survey of restaurant owners indicating improved confidence and approaching the break-even point. It indicates confident consumers and could bring more restaurants back onto commercial airspace.

The survey is from the National Restaurant Association. The organization’s Restaurant Performance Index had its first monthly gain in three months, going from 97.8 in June to 98.1 in July. 100 is par, a time in which business is considered to be steady.

NRA says that the index has been below par for 21 months now.

“Although restaurant operators continue to report soft same-store sales and customer traffic levels, they are more optimistic about improving conditions in the months ahead,” said Hudson Riehle, senior vice president of Research and Information Services for the Association. “Restaurant operators reported a positive six-month economic outlook, and the proportion expecting higher sales rose to its highest level in three months.”

As a group, they definitely see better times ahead – and not that far ahead. The current situation index is lower than the overall benchmark, at 96.8, but the expectations index is approaching par at 99.4.

Restaurateurs are more upbeat about the economy as a whole than they have been as well. In June, 24% thought economic conditions will improve in the next six months. In July, the optimistic segment of the survey jumped all the way to 32%.

RBR/TVBR observation: Of course consumers will really show confidence when they start investing in big ticket items (and when the lending community starts making that possible again for many). But the fact that consumers are confident to blow cash on a meal when they could just as easily save it by eating at home is a good sign – and as part of the entertainment community, restaurants have good reason to advertise.