Restaurant index remains strong to start year

by Eric Schroeder
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WASHINGTON — The Restaurant Performance Index, which tracks the health and outlook for the U.S. restaurant industry, remained strong in January, finishing at 102.7, down from 102.9 in December but up from 102.1 in November.

“A solid majority of restaurant operators reported higher same-store sales and customer traffic in January, which helped keep the R.P.I. well into positive territory,” said Hudson Riehle, senior vice-president of the Research and Knowledge Group for the association. “In addition, nearly 6 in 10 operators expect their business to improve in the next six months, with plans for capital expenditures also continuing at a high level.”

Index values above 100 mean key industry indicators are in a period of expansion. Two components, the Current Situation Index and the Expectations Index, make up the R.P.I.

The Current Situation Index stood at 102.7 in January, down from 102.9 in December. The index measures same-store sales, traffic, labor and capital expenditures. In January, 51% of restaurant operators said they had made a capital expenditure for equipment, expansion or remodeling during the past three months, which was down from 60% in December.

Seventy per cent of operators reported a same-store sales gain between January 2014 and January 2015, which was virtually unchanged from 71% between December 2013 and December 2014. Same-store sales declines were reported by 17% of operators in January, which compared with 19% in December.

Consumer traffic picked up, too, as 66% of operators reported an increase between January 2014 and January 2015, which was up from 61% between December 2013 and December 2014. Consumer traffic declines between January 2014 and January 2015 were reported by 21% of operators, which compared with 23% between December 2013 and December 2014.

The Expectations Index stood at 102.8 in January, down from 102.9 in December. The index measures six-month outlooks for same-store sales, employees, capital expenditures and business conditions.

For the 17th straight month a majority of restaurant operators said they are planning for capital expenditures, as 57% in January said they plan to spend money on equipment, expansion or remodeling in the next six months, which was down from 62% in November.

Compared to the same period in the previous year, 57% of restaurant operators in January said they expect to have higher sales in the next six months, which was up from 52% who said so in December. Only 4% in January said they expect sales volume to be lower over the next six months, which compared with 5% who said so in December.

Restaurant operators are somewhat less bullish about the direction of the overall economy, as 35% in January said they expect economic conditions to improve in six months, which compared with 37% in December. Ten per cent in January said they expect economic conditions to get worse over the next six months while 55% expect conditions to be about the same as they are now.
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