August Restaurant Performance Index rises

by Keith Nunes
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WASHINGTON – Supported by stronger same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index rose modestly to 100.6 in August, a 0.4% increase compared to July.

“Six out of 10 restaurant operators reported positive same-store sales in August, while customer traffic readings bounced back from July’s net decline,” said Hudson Riehle, senior vice-president of the N.R.A.’s research and knowledge group.

The R.P.I. is comprised of two components: the Current Situation Index and the Expectations Index. The Current Situation Index, which includes indicators for same-store sales, traffic, labor and capital expenditures, stood at 100.6 in August, a 0.8% gain compared to July’s level of 99.8.

Restaurant operators reported positive same-store sales for the 15th consecutive month, with August results representing a solid improvement over the July performance. Sixty-one per cent of restaurant operators reported a same-store sales gain between August 2011 and August 2012, up from 53% who reported positive sales in July. In comparison, 25% of operators reported lower same-store sales in August, down from 36% in July.

Restaurant operators also reported a net increase in customer traffic levels in August. Forty-seven per cent of restaurant operators reported higher customer traffic levels between August 2011 and August 2012, up from 35% who reported positive traffic in July. In contrast, only 32% of operators reported lower customer traffic levels in August, down sharply from 46% in July.

The Expectations Index measures restaurant operators’ six-month outlook and is based on four indicators – same-store sales, employees, capital expenditures and business conditions. It stood at 100.7 in August, unchanged from July’s level. Although August marked the 12th consecutive month that the Expectations Index stood above 100, it remained nearly two index points below the post-recession peak reached in March 2012.

“ … The Expectations Index remained dampened compared to recent stronger levels, with restaurant operators retaining a cautious outlook for sales growth and the economy in the months ahead.” Mr. Riehle said.

Restaurant operators remain generally optimistic that their sales levels will improve in the months ahead, as their sales outlook was essentially unchanged from July. Forty per cent expect to have higher sales in six months when compared to the same period in the previous year. Forty-two per cent reported similarly last month. Meanwhile, only 12% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, down slightly from 15% last month.

Restaurant operators are not as bullish about the direction of the overall economy, though their outlook improved somewhat from last month. Twenty-nine per cent said they expect economic conditions to improve in six months, up from 22% who reported similarly last month. Meanwhile, 20% of operators said they expect economic conditions to worsen in the next six months, while 51% think conditions will stay about the same.

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