One of the few bright spots in the US economy is no longer bright. From Wolf Richter at wolfstreet.com:
Plunges like this only occur when something big is going on.
The restaurant industry has been unscathed by the economic slowdown. The meme is that Millennials like to spend their money on “experiences” – such as eating out, drinking at their favorite watering holes, and going places (and eating out) – rather than buying stuff, particularly stuff at brick-and-mortar stores.
These brick-and-mortar stores have been singing the blues of dismal sales, earnings warnings, layoffs, and store closings as consumers refuse to splurge. And to add insult to injury, consumers have been shifting their spending online. But the restaurant industry has been flying above the fray, benefiting from Millennials’ preference for “experiences.”
Or that was the meme. The National Restaurant Association just released its Restaurant Performance Index for December. And it suddenly plunged.
The RPI is a composite of the Current Situation Index and the Expectations Index, both of which track restaurant operators’ responses on same-store sales, traffic, labor, and capital expenditures. “Steady-state level” is 100. Values above indicate expansion, values below indicate contraction. In the data series going back to 2003, the RPI has ranged from its peak of 103.5 in 2004 to its low 96.5 during the worst moment of the Financial Crisis.
“As a result of broad-based declines in both current situation and expectations indicators,” – as the report started out – the RPI for December fell to 99.7, from 101.3 in November and from 102.1 in October, 2.4% in two months, the worst two-month plunge since early 2008, at the cusp of the Financial Crisis.
The Current Situation Index dropped even more steeply, to 99.4 from 100.9 in November and 102.5 in October, 3.1% in two months, also the worst since the beginning of the Financial Crisis.
To continue reading: Restaurant Industry Suddenly Tanks, Worst Plunge since the Beginning of the Financial Crisis
