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Restaurant Performance Index Fell To Its Lowest Level In 14 Months As Operator Optimism Plunged

Although restaurant operators reported positive same-store sales for the 17 th consecutive month in October, results continued to soften from recent months.  Forty percent of restaurant operators reported a same-store sales gain between October 2011 and October 2012, down from 48 percent in September and the lowest proportion in 17 months.  Meanwhile, 36 percent of operators reported lower same-store sales in October, essentially unchanged from 35 percent in September.    

While sales remained positive overall, restaurant operators reported a net decline in customer traffic levels in October.  Thirty percent of restaurant operators reported higher customer traffic levels between October 2011 and October 2012, down from 36 percent who reported positive traffic in September.  In comparison, 41 percent of operators reported lower customer traffic levels in October, unchanged from September.

Along with the softer sales and traffic results, restaurant operators reported a slight drop in capital spending activity.  Forty-six percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 49 percent who reported similarly last month.

The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 99.7 in October – down 1.2 percent from September.  October represented the first time in 14 months that the Expectations Index fell below 100, which represents a pessimistic six-month outlook for the four industry indicators.       

Restaurant operators' outlook for sales growth deteriorated significantly in recent months.  Thirty-one percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 45 percent last month and the lowest level in three years.  Meanwhile, 21 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, up from 11 percent last month.

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