Restaurants get another serving of declining sales
Nearly half of the nation’s restaurants said their business dropped in July as consumers cut back spending in the still-rough economy.
The latest survey from the National Restaurant Assn. rated the outlook for eateries in the coming months to be “uncertain.” It was the fourth straight month of decline in the financial performance of restaurants, according to the organization, which polls its membership monthly to determine their sales, plans and outlook.
Because restaurant traffic is so closely linked to the amount of extra money that people have to spend, the poor economy has exacted a particularly heavy toll in the industry, causing shutdowns and layoffs as sales continued to languish over the late spring and early summer, said Hudson Riehle, head of research for the restaurant organization.
As a result, he said, many restaurant owners are pessimistic about when their fortunes will turn around.
“The operator community has become less optimistic about the longer-term outlook for the economy and sales,” Riehle said.
About 44% of the nation’s restaurant owners said their sales dropped in July, up from 43% in June, according to the survey, which was released this week.
About 39% said their business increased, the same as in June. That’s still an improvement over last fall, when 65% of restaurant owners reported a reduction in sales.
In California, small businesses, including restaurants, are the backbone of the state’s economy, July’s drop in restaurant business confirmed worries that a boost in sales reported last spring was little more than a short-lived improvement.
“In the spring, maybe late winter, we started to see people coming back and eating a bit more,” said Ryan Dudley, who owns the Cellar, a fine dining restaurant in Fullerton. “But I think that as the economy sputters once more, people are beginning to retrench.”
Dudley said he was able to attract a steady flow of customers in July, but only because he offered steep discounts. Much of his traffic this summer has been spurred by online deals offered through the coupon website Groupon, Dudley said.
Eateries in California are suffering more than in other parts of the country because the state’s high unemployment rate has left consumers with less money to spend on eating out, said Jot Condie, chief executive of the California Restaurant Assn.
In cities such as Sacramento, where thousands of government employees are furloughed on many Fridays, some restaurants have become dead zones on days that were previously busy, he said.
A jump in restaurant sales earlier in the year, he said, was “a false start.”
Most restaurant operators said they thought sales would stabilize over the next six months, the survey showed.
sharon.bernstein@latimes.com
