US Restaurant Performance Index declines

WASHINGTON, DC – As a result of softer same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) declined in August.

WASHINGTON, DC – As a result of softer same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) declined in August. The RPI – a monthly composite index that tracks the health of and outlook for the US restaurant industry – stood at 101.5 in August, down 1.2 percent from July and the lowest level in 11 months. Despite the decline, August represented the 30th consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators.

“The RPI’s August decline was the result of broad-based declines in the current situation indicators,” said Hudson Riehle, Senior Vice President, Research and Knowledge Group, National Restaurant Association. “Same-store sales and customer traffic softened from July’s strong levels, while the labor and capital spending indicators also dipped.

“Despite the declines, each of the current situation indicators were in expansion territory above 100, which indicates the restaurant industry remains on a positive growth trajectory,” Riehle added.
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.

Current Situation Index

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 101.4 in August – down 2.3 percent from July and the lowest level since November 2014. Despite the decline, the Current Situation Index remained above 100 for the 18th consecutive month, which signifies expansion in the current situation indicators.

• Same-store sales: A majority of restaurant operators reported higher same-store sales for the 18th consecutive month in August, though results were much softer than the July readings. Fifty-six percent of restaurant operators reported a same-store sales gain between August 2014 and August 2015, down from 73 percent who reported higher sales in July. In comparison, 32 percent of operators reported a same-store sales decline in August, up from 16 percent in July.

• Customer traffic: Restaurant operators also reported softer customer traffic results in August. Forty-one percent of restaurant operators reported an increase in customer traffic between August 2014 and August 2015, down from 59 percent who reported higher traffic in July. Thirty-seven percent of operators said their traffic declined in August, up from 23 percent in July.

• Capital spending: Restaurant operators continued to report solid capital spending activity in August. Sixty-three percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which marked the 11th consecutive month in which a majority of operators reported making an expenditure.

Expectations Index

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 101.6 in August – down slightly from a level of 101.7 in July. August represented the 34th consecutive month in which the Expectations Index stood above 100, which indicates restaurant operators remain optimistic about business conditions in the coming months.

• Sales outlook: Restaurant operators have a generally positive outlook for sales in the months ahead. Forty-four percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 40 percent who reported similarly last month. Twelve 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 44 percent expect their sales to remain about the same.

• Overall economy: In contrast, restaurant operators are much less optimistic about the direction of the overall economy. Only 22 percent of restaurant operators said they expect economic conditions to improve in six months, while 21 percent expect conditions to worsen. This came on the heels of net negative readings in the previous two months.

• Capital expenditure planning: Although the economic outlook is mixed, a majority of restaurant operators said they are planning for capital expenditures in the months ahead. Sixty percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down from 66 percent who reported similarly last month.

US Restaurant Performance Index declines

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Avatar of Linda Hohnholz
Written by Linda Hohnholz

WASHINGTON, DC – As a result of softer customer traffic levels and a somewhat dampened outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) regi

WASHINGTON, DC – As a result of softer customer traffic levels and a somewhat dampened outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a moderate decline in September. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.0 in September, down 0.9 percent from its August level. Despite the decline, the RPI remained above 100 for the 19th consecutive month, which signifies expansion in the index of key industry indicators.

“The September decline in the RPI was due in large part to a dampened outlook among restaurant operators for business conditions in the months ahead,” said Hudson Riehle, Senior Vice President of the Research and Knowledge Group for the National Restaurant Association. “Restaurant operators remain unimpressed about the direction of the economy, with elevated food costs remaining at the top of their list of challenges.”

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 101.0 in September – down 0.8 percent from August. Despite the drop, the Current Situation Index remained above 100 for the seventh consecutive month, which signifies expansion in the current situation indicators.

A majority of restaurant operators reported higher same-store sales for the seventh consecutive month. Sixty-three percent of restaurant operators reported a same-store sales gain between September 2013 and September 2014, essentially unchanged from 62 percent who reported higher sales in August. Meanwhile, only 23 percent of operators reported a same-store sales decline in September, up slightly from 21 percent in August.

In contrast, restaurant operators reported somewhat softer customer traffic results in September. Forty percent of restaurant operators reported an increase in customer traffic between September 2013 and September 2014, while 33 percent reported lower customer traffic. In August, 45 percent reported higher customer traffic, while 31 percent reported a decline.

With sales and traffic results coming in mixed in September, restaurant operators reported somewhat dampened capital spending activity. Forty-nine percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 59 percent who reported similarly last month.

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 100.9 in September – down 1.1 percent from August and the lowest level in 11 months. Despite the decline, September represented the 23rd consecutive month in which the Expectations Index stood above 100, which indicates restaurant operators remain generally optimistic about business conditions in the months ahead.

Restaurant operators remain generally positive about sales gains in the coming months. Forty percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down slightly from 45 percent who reported similarly last month. Meanwhile, eight 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, up from five percent last month.

While restaurant operators are relatively optimistic about sales growth, their outlook for the economy remains mixed. Twenty percent of restaurant operators said they expect economic conditions to improve in six months, while 19 percent expect the economy to worsen. The remaining 61 percent expect economic conditions in six months to be about the same as they are now.

For the 13th consecutive month, a majority of restaurant operators said they are planning for capital expenditures in the months ahead. Fifty-three percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down from 59 percent who reported similarly last month.

The RPI is based on the responses to the National Restaurant Association’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.

US Restaurant Performance Index declines

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Avatar of Linda Hohnholz
Written by Linda Hohnholz

WASHINGTON, DC – Due in large part to softer customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a moderate decline in June.

WASHINGTON, DC – Due in large part to softer customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a moderate decline in June. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.3 in June, down from a level of 102.1 in May and the first decline in four months. Despite the drop, the RPI remained above 100 for the 16th consecutive month, which signifies expansion in the index of key industry indicators.

“Although overall same-store sales remained positive in June, the RPI dipped as a result of softer customer traffic levels,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Looking forward, restaurant operators are generally optimistic about sales growth in the months ahead, and their outlook for capital spending remains near post-recession highs.”

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 100.9 in June – down 1.1 percent from May and the first decline in four months. Despite the drop, the Current Situation Index stood above 100 for the fourth consecutive month, which signifies expansion in the current situation indicators.

For the fourth consecutive month, a majority of restaurant operators reported higher same-store sales, though overall results were softer than the May performance. Fifty-five percent of restaurant operators reported a same-store sales gain between June 2013 and June 2014, down from 65 percent who reported similarly in May. In comparison, 27 percent of operators reported a same-store sales decline in June, up from 19 percent who reported similarly in May.

Restaurant operators also reported softer customer traffic results in June. Thirty-nine percent of restaurant operators reported an increase in customer traffic levels between June 2013 and June 2014, down from 47 percent who reported higher traffic in May. Meanwhile, 41 percent of operators said their customer traffic declined in June, up from 29 percent who reported similarly in May.

Although sales and customer traffic levels softened somewhat in June, capital spending activity remained solid. Fifty-three percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, matching the proportion who reported similarly last month.

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 101.7 in June – down from levels of 102.2 in both April and May. However, June represented the 20th consecutive month in which the Expectations Index stood above 100, which represents an optimistic outlook among restaurant operators for the months ahead.

Restaurant operators remain generally optimistic about sales growth in the months ahead. Forty-four percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 50 percent who reported similarly last month. In comparison, only 10 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, up slightly from 8 percent last month.

Restaurant operators are somewhat less bullish about the overall economy. Twenty-seven percent of restaurant operators said they expect economic conditions to improve in six months, while 18 percent expect the economy to worsen. The remaining 55 percent expect economic conditions in six months to be about the same as they are now.

For the tenth consecutive month, a majority of restaurant operators are planning for capital expenditures in the coming months. Fifty-nine percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 62 percent who reported similarly last month.

The RPI is based on the responses to the National Restaurant Association’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 full report is available online at Restaurant.org/RPI.

The RPI is released on the last business day of each month, and a more detailed data and analysis can be found on Restaurant TrendMapper, the Association’s subscription-based web site that provides detailed analysis of restaurant industry trends.

About the author

Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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