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NRA Seminar Series Coaches Operators On 'Greening' Foodservice; Restaurant Industry Performance And Outlook Continue To Soften

Posted On: 5/12/2008

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CHICAGO -- The National Restaurant Association Restaurant, Hotel-Motel Show, which opens on Saturday, May 17, and runs through May 20 at McCormick Place here, will feature a special series of education sessions focused on sustainability and environmentally friendly measures operators can take to "green" their businesses.

Topics will range from "5 Things Operators Must Know About Energy Efficiency," which will focus on initiatives from utility provider Pacific Gas & Electric Co.'s Foodservice Technology Center and the Environmental Protection Agency's Energy Star program. Operators will also learn more about the many methods by which they can reduce their carbon footprint by sourcing renewable energy to power their businesses during a session on "New Ways to Power Your Business."

"Lean, Green & Clean: Environmental Practices in Collegiate Foodservice" will examine how colleges and universities are meeting student demand for socially responsible food sourcing, convenience and low-cost alternatives.

In another seminar, "Marketing to Conserving Customers: A Guide to Operating Green with a Triple Bottom Line," operators will learn how to market to savvy customers who care about the food they eat and their impact on the world around them.

Sodexo's vice-president of corporate citizenship will explain how increasing demand creates opportunity during his presentation on "Organic Growth: Being Green to Build Customer Loyalty."

NRA research shows that 62% of consumers are likely to choose a restaurant based on its environmental friendliness, and nearly one-third of restaurant operators plan to allocate a larger part of their budget to such efforts this year. In addition, the association's survey of more than 1,200 chefs shows organics, local produce and sustainable seafood are among the hottest menu trends. And, kitchen equipment that saves water and energy is the second most notable equipment trend, after multi-purpose equipment.

Separately, the outlook for the restaurant industry continued to weaken in March, as the National Restaurant Association's comprehensive index of restaurant activity fell sharply. NRA's Restaurant Performance Index  -- a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry -- stood at 97.9 in March, down 0.9% from February and its lowest level on record.

"Six out of the eight indicators declined in March, signifying both a slowdown in current industry performance as well as a weakening in the outlook for the industry in the months ahead. The soft economy continues to weigh on the minds of restaurant operators," said Hudson Riehle, senior vice-president of research and information services for the association.

Of restaurant operators surveyed, 25% said the economy is the No. 1 challenge facing their businesses, followed by food costs (22%), building and maintaining sales volume (16%) and recruiting and retaining employees (14%).

The index is based on the responses to the NRA's Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. The RPI consists of two components: the Current Situation Index and the Expectations Index. It is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values under 100 represent a period of contraction.

The Current Situation Index, which measures trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 97.1 in March -- down 1.5% from February and its lowest level in more than five years. In addition, March marked the seventh consecutive month below 100, which signifies contraction in the current situation indicators.

Restaurant operators reported negative same-store sales in March for the fourth time in the last five months. Twenty-eight percent of restaurant operators cited a same-store sales gain between March 2007 and March 2008, down from 44% in February. Same-store sales declined 55% in March, up significantly from 39% a month prior.
Restaurant operators also reported weaker customer traffic levels in March, with 19% citing an increase in customer traffic between March 2007 and March 2008, down from 32% who reported similarly in January. Traffic declined for 61% of operators, versus 46% who said traffic declined in February.

Restaurant operators continued to report relatively soft capital spending activity. Forty-one percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up slightly from 40% who reported similarly in February.

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 98.8 in March -- down 0.3% from February and its lowest level on record. In addition, March represented the fifth consecutive month in which the Expectations Index stood below 100.

Restaurant operators are less optimistic about sales growth in coming months. Only 29% of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 30% who reported similarly the prior month and the lowest level on record. Additionally, 38% 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 34% in February and the highest level on record.

Restaurant operators remain pessimistic about the direction of the economy. While 16% of operators expect economic conditions to improve in six months, up slightly from 14% the previous month, 44% of operators said they expect the situation to worsen in six months, versus 46% saying so in February.

In keeping with less confidence in the economic outlook, operators' plans for capital expenditures continue to drop off; 48% plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down from 51% who reported similarly in February, and the lowest level on record.