Restaurant performance strong, but outlook weakens
July 31, 2012
by Keith Nunes
WASHINGTON — The National Restaurant Association’s Restaurant Performance Index (R.P.I.) remained above 100 for the month of June, a sign of continued market expansion, but the outlook for the next six months indicates the market may soften. The R.P.I. was 101.4 in June, unchanged from the level in May.
“The latest Restaurant Performance Index reflects improvements in each of the four current situation indicators in June,” said Hudson Riehle, senior vice-president of the Research and Knowledge Group for the N.R.A. “Restaurant operators reported positive same-store sales and customer traffic, while their capital spending activity advanced for the second consecutive month.
“However, although the overall current operating environment remains positive, operators have definitely tempered their expectations for the future. Each of the four expectations indicators softened in June, including restaurant operators’ least positive economic outlook in eight months. Still, market conditions are substantially better than two and three years ago.”
The R.P.I.’s current situation index, which measures current trends in the four industry indicators of same-store sales, traffic, labor and capital expenditures, stood at 101.5 in June — up 0.7% from May and the strongest level in three months.
The R.P.I.’s expectations index, which measures restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 101.3 in June — down 0.7% from May and the third consecutive monthly decline. Although June marked the tenth consecutive month that the expectations index stood above 100, it also represented the weakest level in seven months.
Restaurant operators are optimistic sales levels will improve in the months ahead. Fifty percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 48% who reported similarly last month. However, 13% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, the highest proportion in eight months.
While operators are reasonably optimistic about their sales prospects in the months ahead, they are decidedly less bullish about the direction of the overall economy. Only 28% of restaurant operators said they expect economic conditions to improve in six months, down from 36% last month. Twenty-one per cent of operators said they expect economic conditions to worsen in the next six months, up from 19% last month.