Restaurant Performance Index registers short-term improvement
by Keith Nunes
WASHINGTON — Increased same-store sales combined with an increase in customer traffic nudged the National Restaurant Association’s Restaurant Performance Index up 0.5% during November. The R.P.I. stood at 99.9 in November compared with 99.4 in October.
While the increased sales and customer traffic were positive signs for the food service sector, Hudson Riehle, senior vice-president of the N.R.A.’s research and knowledge group, said restaurant operators remained concerned about the overall direction of the U.S. economy, particularly the negotiations related to the “fiscal cliff.”
The R.P.I. is comprised of two components, the current situation index and the expectations index. The current situation index takes such issues into account as same-store sales, customer traffic, labor and capital expenditures.
Restaurant operators reported positive same-store sales for the 18th consecutive month, with November’s results representing the strongest performance in three months. Fifty-five per cent of restaurant operators reported a same-store sales gain between November 2011 and November 2012, up from 40% who reported positive sales in October. Meanwhile, 30% of operators reported lower same-store sales in November, down from 36% in October.
Restaurant operators also saw a net gain in customer traffic levels in November, with 43% experiencing higher traffic levels between November 2011 and November 2012, up from 30% in October. Thirty-five per cent of operators reported lower customer traffic levels in November, down from 41% in October.
Although sales and traffic results improved, restaurant operators reported a dip in capital spending. Thirty-seven per cent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the lowest level in 32 months.
The R.P.I.’s expectations index focuses on the sector’s six-month outlook, specifically as it relates to same-store sales, employees, capital expenditures and overall business conditions. The November expectations index was an improvement over October. At 99.7, it still signals that restaurant operators are uncertain about the business environment in the months ahead.
Restaurant operators are somewhat more optimistic about sales growth in the coming months. Thirty-seven per cent expect to have higher sales in six months (compared to the same period in the previous year), up from 31% last month. Meanwhile, 14% 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 from 21% last month.
In contrast, operators remain generally pessimistic about the direction of the overall economy. Only 21% said they expect economic conditions to improve in six months, essentially unchanged from 20% last month. Thirty-six per cent said they expect economic conditions to worsen in the next six months, while 38% reported similarly last month.
Along with the uncertain outlook, restaurant operators reported a pullback in capital spending plans for the months ahead. Forty-five per cent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down from 50% who reported similarly last month.