Restaurant operator optimism climbs in October

by Keith Nunes
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WASHINGTON – After sliding downward for three consecutive months, the National Restaurant Association’s Restaurant Performance Index rose to 100.9 in October, buoyed by stronger same-store sales and a more optimistic outlook from the restaurant operators who participate in the monthly survey.

“The R.P.I.’s October gain was driven by broad-based gains in the index components, most notably solid improvements in same-store sales and customer traffic,” said Hudson Riehle, senior vice-president of the Research and Knowledge Group for the N.R.A. “Looking forward, restaurant operators are relatively optimistic about sales growth in the months ahead, though their outlook for the overall economy remains mixed.”

The R.P.I. features two components, a current situation index that measures same-store sales, traffic, labor and capital expenditures, and an expectations index that measures restaurant operators’ six-month outlook for same-store sales, labor, capital expenditures and overall business conditions.

The October current situation index stood at 100.9, up 1% compared to September’s current situation index. A majority of restaurant operators reported higher same-store sales in October, and the results were a solid improvement over September’s performance.  Fifty-four per cent of restaurant operators reported a same-store sales gain between October 2012 and October 2013, up from 41% who reported higher sales in September. In comparison, 30% of operators reported a decline in same-store sales in October, down from 40% in September.   

Restaurant operators also reported stronger customer traffic levels in October.  Forty-three per cent of operators said customer traffic levels between October 2012 and October 2013 rose, up from 33% who reported a traffic gain in September. Thirty-nine per cent of operators reported a decline in customer traffic in October, down from 44% in September.

The expectations index stood at 100.9 in October, up 0.4% from September. Restaurant operators remained cautiously optimistic about the next six months. Thirty-six per cent expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 34% who reported similarly last month. Meanwhile, 11% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, compared to 13% in September.

In contrast, restaurant operators remained mixed about the direction of the economy.  Twenty-seven per cent said they expect economic conditions to improve in six months, while 26% expect the economy to worsen.  Operators’ outlook was an improvement over September, when 19% said they expected the economy would improve and 28% thought conditions would worsen. 

Despite the uncertain outlook for the economy, a majority of restaurant operators said they are planning for capital expenditures in the months ahead. Fifty-three per cent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 52% who reported similarly in September.
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