Restaurant Performance Index Declined in December as Sales and Customer Traffic Softened

Feb 03, 2014 No Comments by
WASHINGTON, Feb. 3, 2014 /PRNewswire/ — As a result of softer same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a moderate decline in December.  The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.5 in December, down 0.6 percent from November and the first decline in three months.  Despite the decline, the RPI remained above 100 for the 10thconsecutive month, which signifies expansion in the index of key industry indicators.

“The December decline in the RPI was due to a dip in the current situation indicators, which in turn was partly caused by inclement weather in large parts of the country,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association.  “Despite the softer December results, restaurant operators remain generally optimistic about business conditions in the months ahead.”

The RPI 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 below 100 represent a period of contraction for key industry indicators. The Index consists of two components – the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 99.5 in December – down 1.7 percent from November and the lowest level in 10 months.  Although restaurant operators reported net positive same-store sales in December, softness in the customer traffic and labor indicators outweighed the performance, which resulted in an overall Current Situation Index reading below 100.

Restaurant operators reported net positive same-store sales for the 10th consecutive month in December, but results were much softer than recent months.  Forty-four percent of restaurant operators reported a same-store sales gain between December 2012 and December 2013, down from 57 percent who reported higher sales in November.  In comparison, 41 percent of operators reported a decline in same-store sales in December, up from 29 percent in November.

Restaurant operators also reported softer customer traffic levels in December.  Thirty percent of restaurant operators reported customer traffic growth between December 2012 and December 2013, down from 47 percent who reported a traffic gain in November.  In comparison, 46 percent of operators reported a decline in customer traffic in December, up from 35 percent in November.

Despite the dampened sales and traffic levels, restaurant operators continued to report positive capital spending levels.  Fifty-two percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the eighth consecutive month in which a majority of operators reported making expenditures.

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 101.5 in December – up 0.4 percent from a level of 101.1 in November.  In addition, December represented the 14thconsecutive month in which the Expectations Index stood above 100, which indicates that restaurant operators remain generally optimistic about business conditions in the months ahead.

Restaurant operators are generally positive about sales expectations in the coming months.  Thirty-eight percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), unchanged from the proportion who reported similarly last month.  Meanwhile, 13 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, while 49 percent expect their sales to remain about the same.

In comparison, restaurant operators are somewhat less optimistic about the direction of the economy.  Twenty-eight percent of restaurant operators said they expect economic conditions to improve in six months, while 16 percent expect the economy to worsen.  The remaining 56 percent expect economic conditions to remain generally unchanged in the next six months.

Despite mixed economic outlook, a majority of restaurant operators are planning for capital expenditures in the coming months.  Sixty-one percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 55 percent who reported similarly last month.

Headlines, Retail

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