family dining

Restaurant Performance Index declined in January

Restaurant operators remain optimistic about future.

Due to large part to weaker results among the current situation indicators, the National Restaurant Assn.’s (NRA) Restaurant Performance Index (RPI) registered a moderate decline in January. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.1 in January, down 0.4% from 100.5 in December.

January’s decline in the RPI was the result of broad-based drops in the current situation indicators, NRA noted. However, the group said the comparatively elevated level of the Expectations Index suggests restaurant operators are cautiously optimistic that business conditions will improve from where they are now 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. RPI 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 98.6 in January – down 0.9% from a level of 99.5 in December. January represented the fourth consecutive month in which the Current Situation Index stood below 100, as same-store sales and customer traffic levels remained soft.

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 January – unchanged from the previous two months. Each of the four expectations indicators stood above 100 for the fourth consecutive month, which represents a level of stability that hasn’t been seen since the first half of 2015.

Softer same-store sales, customer traffic

Restaurant operators reported dampened same-store sales results in January. Thirty-three percent of restaurant operators reported a same-store sales increase between January 2016 and January 2017, down from 38% who reported a sales gain in December.

Meanwhile, 50% of restaurant operators said their same-store sales declined in January, up from 42% who reported lower sales in December. Restaurant operators also reported softer customer traffic levels in January. Twenty-six percent of restaurant operators reported an increase in customer traffic between January 2016 and January 2017, down from 29% of operators who reported similarly in December. Meanwhile, 54% of operators said their customer traffic declined in January, up from 47% in December.

Restaurant operators also reported a pullback in capital spending activity in recent months. Fifty percent of restaurant operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which represented the lowest level in more than two years.

Although restaurant operators reported dampened same-store sales and customer traffic levels in recent months, they remain cautiously optimistic that business conditions will improve in the coming months. Thirty-four percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down slightly from 39% who reported similarly last month. Only 10% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, unchanged from last month.

Restaurant operators are also relatively positive about the direction of the overall economy. Thirty-four percent of restaurant operators said they expect economic conditions to improve in six months, while only 12% said they expect conditions to worsen. This represented the fourth consecutive month of a positive outlook for the economy, which followed 11 straight months of net negative expectations.

Restaurant operators are also continuing to plan for capital expenditures in the coming months. Fifty-five percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down only slightly from 57% who reported similarly last month.

TAGS: Business
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish