Restaurant Industry Suddenly Tanks, Worst Plunge since the Beginning of the Financial Crisis

[marmar]

Restaurant Industry Suddenly Tanks, Worst Plunge since the Beginning of the Financial Crisis
by Wolf Richter • February 3, 2016


[font color="blue"]Plunges like this only occur when something big is going on.[/font]

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. .................(more)

http://wolfstreet.com/2016/02/03/restaurant-industry-suddenly-tanks-worst-plunge-since-the-beginning-of-the-financial-crisis/

[nichomachus]

1. Millennials are passé -- it's now Gen Z, and they like to buy stuff nt

[SheilaT]

2. Not really. Millennials are those born between

1982 and 2000, give or take a year or two. Gen Z would still be teens.

What has apparently happened is that Gen X has somehow either disappeared (odd, because so of my very best friends are GenXers) or the Millennial label has been lengthened to include them, which really isn't correct.

If you have some spare time, take a look at the book Generations by William Strauss and Neill Howe. Absolutely fascinating detailed breakdown of the four generational types as they describe them, and how each type fits into our history. In that they do call Gen X "Thirteeners", because they'd have been the thirteenth generation since the founding of this country. But still excellent.

[nichomachus]

3. Millennials are starting to have kids

And you don't do a lot of dining out when you have two rug rats at home.

http://www.nytimes.com/2015/09/20/fashion/move-over-millennials-here-comes-generation-z.html?_r=0

Also, when unemployment is hovering around 20 percent, depsite the lies the government tells you, dining out is one of the first things to go.

[elleng]

4. Right, my 2 millennial kids (27 and 31)

have their own kids, family full of rugrats!

[Trajan]

5. That's not true in our experience

We saw MANY mom and pop restaurants take a dive during the 2007-2008 downturn ... They weren't isolated from the pain - they were right in the cross hairs ....

[Fuddnik]

9. I know that.

I bought an Italian Restaurant and Pizza joint in Nov. 2007, right before the economy tanked. Businesses where we had a huge lunch delivery clientele moved or closed. Gas shot up to $4.00 a gallon, and our suppliers started adding on fuel surcharges for deliveries. The surcharges added about 15% to our food expenses. Our customers started losing their jobs.

I had some major disagreements with my partner, and he bought me out, but he wound up closing a year later.

I'm working part-time now, delivering pizzas a couple of days a week, just for extra beer and golf money, but I can see things starting to slow down just a little from 6 months ago.

[Warpy]

10. Around here, it was chains and mid level restaurants

demonstrating that the middle class was being gutted while the prole food chains like McDonald's were still doing a brisk business. Now McD's is posting lower profits, so I guess the kids aren't getting Happy Meals when Mom has to work late, it's PB&J, instead as the race to the bottom continues.

Odd how nobody at the top realizes that a)cutting wages didn't end inflation and b)cutting wages is cutting their dividends.

[cojoel]

6. The price of dining out has climbed a lot

At some point even "experiences" still need to be affordable to be "experienced".

[saturnsring]

7. the price of eating out has sky-rocketed

[cprise]

11. and the food has turned to crap

by my sampling.

[Person 2713]

8. Prices for casual dining in Illinois has gotten ridiculous . I don't know about better places that

always were out of my reach.