Due to a softer outlook among restaurant operators for sales growth and the economy, the National Restaurant Association’s Restaurant Performance Index (RPI) declined for the third consecutive month. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.5 in August, down 0.2 percent from July’s level of 100.7. Despite the recent declines, the RPI remained above 100 for the sixth consecutive month, which signifies expansion in the index of key industry indicators.
NRA Restaurant Performance Index Values Greater than 100=Expansion Values Less than 100=Contraction |
“The August
decline in the RPI was due almost entirely to a dip in the expectations
indicators, with restaurant operators becoming less bullish about sales growth and
the economy in the months ahead,” said Hudson Riehle, senior vice president of
the Research and Knowledge Group for the Association.
“In
contrast, operators reported positive same-store sales and customer traffic
levels in August, and a majority of operators reported capital expenditures for
the fourth consecutive month,” 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.
The Current
Situation Index, which measures current trends in four industry indicators
(same-store sales, traffic, labor and capital expenditures), stood at 100.7 in
August – up 0.6 percent from July and the first increase in three months.
In addition, the Current Situation Index stood above 100 for the fifth
consecutive month, which signifies expansion in the current situation
indicators.
A majority
of restaurant operators reported positive same-store sales in August, and the
overall results were an improvement over July’s performance. Fifty-three
percent of restaurant operators reported a same-store sales gain between August
2012 and August 2013, up from 44 percent who reported higher sales in
July. In comparison, 33 percent of operators reported a decline in same-store
sales in August, down slightly from 36 percent in July.
Restaurant
operators also reported stronger customer traffic levels in August.
Forty-five percent of restaurant operators reported higher customer traffic
levels between August 2012 and August 2013, up from 35 percent who reported a
traffic gain in July. Meanwhile, 38 percent of operators reported a
decline in customer traffic in August, down from 43 percent in July.
Along with
positive sales and traffic results, restaurant operators continued to report
positive capital spending levels. Fifty-three percent of operators said
they made a capital expenditure for equipment, expansion or remodeling during
the last three months, the fourth consecutive month in which a majority of operators
reported 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 100.4 in August – down 0.9 percent from July and
the lowest level in eight months. Although an Expectations Index above
100 continues to suggest that operators are generally positive about business
conditions in the months ahead, their optimism is somewhat dampened compared to
recent months.
Restaurant
operators are somewhat less optimistic about sales growth in the coming
months. Thirty-six percent of restaurant operators expect to have higher
sales in six months (compared to the same period in the previous year), down
slightly from 37 percent last month and the lowest level in 10 months.
Meanwhile, 16 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 9 percent last month and the highest level in seven months.
Restaurant
operators are also less bullish about the economy. Twenty-three percent
of restaurant operators said they expect economic conditions to improve in six
months, unchanged from last month. However, 22 percent of operators said
they expect economic conditions to worsen in the next six months, up from 18
percent last month and the highest level in eight months.
With a more cautious outlook for sales growth and the economy, fewer operators are reporting plans for capital expenditures. Forty-five percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down from 53 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 and video summary are 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.
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.
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