Tuesday, November 30, 2010

Restaurant Performance Index Reaches 3-Year High

The National Restaurant Association (NRA) reported today that its Restaurant Performance Index reached a three-year high of 100.7 in October, the highest level since September 2007 (see chart above).  Restaurant sales set a new monthly industry record in October, with sales above last October by more than 4%, and year-to-date restaurant sales above last year by 2.6%.  There were 24,000 new restaurant industry jobs added in October, bringing the total number of new jobs added this year at U.S. restaurants to more than 130,000.  

A spokesman for the NRA, senior VP Hudson Riehle, credited recent improvements in real disposable income (+2.5% year-over-year gain in October, the highest increase in more than two years) as the main driver of increased restaurant activity in October.  Further, Riehle says that with the upcoming holiday period ahead, it is definitely turning into a sales growth momentum  environment for the restaurant industry, which is expected to carry well into 2011.     

Consumer spending at restaurants is highly cyclical, and consumers can easily reduce this type of discretionary spending as economic conditions weaken, and this is exactly what the graph above shows.  In fact, consumers starting cutting back on restaurant spending in the late summer of 2007, even before the recession officially started.  The upward trend in the restaurant index over the last year suggests that consumers are gradually becoming more confident and eating out more often, and it looks like this trend will continue. 


At 11/30/2010 3:23 PM, Blogger morganovich said...

and with just 4 years at 102, we'll make up the ground we lost in this dip.

using more realistic historical numbers, it's going to be more like 6-8 years to get back to 2007 levels.

but, it's a start, so long as we don't roll over and go negative again like we did in the beginning of the year.

At 11/30/2010 7:50 PM, Blogger Benjamin Cole said...

Morgan-This is a weak recovery, especially in real estate.
Consider offshoring assets and yourself to Thailand, East Asia. I think the future is there--the biggest economic boom of all time, dwarfing all else, is underway.

The USA? An overindebted empire, spending crazily on welfare and coprolitic military parasites.


Post a Comment

<< Home