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Tag Archives: economic forecast

And yet, not all news is positive for the restaurant industry

Restaurant operators’ optimism wanes

NRA’s Restaurant Performance Index slips in June

July 30, 2010 | By Paul Frumkin

Restaurant operators appear to be less optimistic about their future prospects, which contributed to a decline in the National Restaurant Association’s Restaurant Performance Index for the third consecutive month.

The RPI fell to 99.5 in June, a decline of 0.3 percent from May and the lowest level since February, according to the NRA. It also marks the second consecutive month the RPI has stood below 100, which reflects contraction in the monthly index of key foodservice industry indicators.

Read the rest of the article here:

http://www.nrn.com/article/restaurant-operators-optimism-wanes?ad=news

Positive news on the high-end front

From Nation’s Restaurant New’s Breaking News

High-end restaurant chains say business, travel spending up

August 3, 2010 | By Molly Gise, Lisa Jennings

The return of business travel and conventions is driving traffic at fine-dining chains, many of which have recently reported positive same-store sales after suffering from empty dining rooms during the recession.

While steakhouse chains including Morton’s, Ruth’s Chris and The Capital Grille have taken advantage of the increased spending among their core markets, the high-end seafood chain McCormick & Schmick’s says it has suffered from the Gulf oil spill, which has kept consumers away.

Read the rest of the article here:

http://www.nrn.com/article/high-end-restaurant-chains-say-business-travel-spending?ad=news

Mother Nature hammers the restaurant sector

A look at industry same-store sales

by Mike Dempsey

And speaking of O’Charley’s

Jeffrey Warne, recently named CEO of Nashville-based O’Charley’s Inc. and The Tennessean, the Nashville newspaper, did a Q&A with him in today’s Sunday edition.

Here is just one question, as answered by Warne:

How has the company controlled margins?

If you go back to 2008, we made the tough decision to reduce support staff. We eliminated some positions and through attrition we did significantly reduce the staff by about 20 percent. We also set up in 2008 a labor model that would predict when guests are in the building.

Using eight years of historical data, we mapped when guests were in our restaurants in 15-minute increments. The labor model was very effective at controlling labor costs. When we matched our labor as best as we could to when (guests) were in the building, our guest satisfaction scores took off, as well.

It is an informative series of questions and answers with a “numbers guy” and you can read the entire interview here:

http://tinyurl.com/Warne-interview

But you might want to hurry, as this article could be archived pretty quickly and might not be available for long.

Good and not-so-good news about restaurants in this economy

 

Nation’s Restaurant News has two articles in their “Breaking News” feature that points out the complexities of restaurants dealing with the economic crisis: 

O’Charley’s posts positive guest counts By Elissa  Elan 

NASHVILLE, Tenn. (Feb. 4, 2010) While consumer pressures tied to the recession pushed fourth-quarter sales into negative territory at the three chains of O’Charley’s Inc., its namesake brand and Stoney River Legendary Steaks chain posted their first year-to-year traffic increases in more than three years. 

The company also posted a narrowed net loss of $15.2 million, or 72 cents per share, for the quarter ended Dec. 27, versus a loss of $68.2 million, or $3.34 per share, in the same quarter a year ago. The improvement was mostly because of year-ago charges, when O’Charley’s booked more than $60 million in impairment for goodwill and restaurant closures. 

Latest-quarter revenue declined 6.9 percent to $188.9 million, the result of consumers cutting back on spending, O’Charley’s officials said. The company, which operates or franchises 368 restaurants under the O’Charley’s, Stoney River Legendary Steaks and Ninety Nine Restaurants casual-dining brands, had expected sales of between $190 million and $195 million. 

Read the rest of the article here:
 
Notice that this is a good news/bad news sort of thing. Cover counts are up, but people are spending less. This means that sales are still soft.
 
Also:
 

U.S. restaurant count declines

By Molly  Gise 

CHICAGO (Feb. 4, 2010) The number of U.S. restaurants fell this past fall as the industry continued to suffer from serious declines in traffic and sales. The rate of closures, however, was less than what was reported last spring. 

According to The NPD Group’s ReCount data released Wednesday, the total number of U.S. restaurants declined 0.3 percent, or by 1,652 restaurants, to 578,353 locations in the fall of 2009, compared with the fall of 2008. ReCount tracks commercial restaurant locations twice a year, in the spring and fall. 

Restaurant closures were more severe in the spring of 2009, when the total number of U.S. restaurants fell 1 percent from a year earlier, reflecting the loss of more than 4,000 eateries. 

“NPD’s fall 2009 ReCount reflects a slowdown in chains expanding, and two years of a challenging economy already weeding out the poorest performing restaurants,” said Greg Starzynski, NPD’s director of product development for foodservice. 

Read the rest of the article here:
 
 
So, while there are positive signs, the restaurant sector continues to face challenges, which makes it even more incumbent for waiters to execute at a high level. If you’re seeing more people but less total sales, upselling is more important than ever. As always, upselling shouldn’t be done solely to extract the maximum amount of money from the guest, but should be done to enhance the dining experience. Never lose sight of this basic tenet.
 

More positive financial news for restaurants in 2010

From Nation’s Restaurant News:

Restaurant industry sees signs of light

by Sarah Lockyer

NEW YORK (Jan. 6, 2010) Two recent surveys forecast a slightly sunnier picture for the year ahead among both consumers and franchise business leaders, providing a glimpse of clearer skies for the restaurant industry.

Last week, a key consumer barometer, The Conference Board’s Consumer Confidence Index, showed its second straight gain in two months, with the consumer outlook for the months ahead reaching a two-year high.

The Conference Board, a New York-based research group, said the index rose in December to 52.9, from 50.6 in November. The index is based on a survey of 5,000 U.S. households, and readings above 90 indicate a stable economy and above 100 indicate economic growth. Tracking consumer confidence is key for many restaurant operators, as consumer sentiment is tied so closely to consumer spending, which drives the engine of the restaurant industry.

Read the rest of the article here:

Experts cautiously optimistic about the “restaurant industry’s fortune” in 2010