Restaurant operators report positive sales for 8th consecutive month

 
Feb. 29, 2012

The outlook for the restaurant industry is positive for the coming months, as the National Restaurant Association's Restaurant Performance Index (RPI) remained well above 100 in January.

The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.3 in January, down from December's strong level of 102.2.

Despite the decline, January represented the third consecutive month that the RPI stood above 100, which signifies expansion in the index of key industry indicators.

"Although the Restaurant Performance Index dipped somewhat from December's nearly six-year high, it remained solidly in positive territory," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. "Restaurant operators reported positive same-store sales for the eighth consecutive month, and a majority of them expect business to continue to improve in the months ahead."

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 100.6 in January – down 1.5 percent from December's seven-year high of 102.1. Despite the drop, the index stood above 100 for the third consecutive month.

Fifty-six percent of restaurant operators reported a same-store sales gain between January 2011 and January 2012, while only 26 percent reported a same-store sales decline. This was somewhat softer than December's strong results, when 69 percent of operators reported a sales gain and 18 percent reported lower sales.

Forty-six percent of restaurant operators reported higher customer traffic levels between January 2011 and January 2012, while 30 percent reported a traffic decline. In December, 57 percent of operators reported higher customer traffic, while just 23 percent reported a traffic decline.

Along with softer sales and traffic levels, operators reported somewhat lower capital spending levels. Forty-two percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the lowest level in 10 months.

Six-month outlook

The Expectations Index, which measures restaurant operators' six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 102.1 in January – essentially unchanged from December's level of 102.3. January marked the fifth consecutive month that the Expectations Index stood above 100, which represents an optimistic outlook among restaurant operators for business conditions in the months ahead.

Fifty-three percent expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 51 percent who reported similarly last month. In comparison, only seven percent of operators expect their sales volume in six months to be lower than it was during the same period in the previous year.

Thirty-seven percent said they expect economic conditions to improve in six months, down slightly from 39 percent last month. Only 11 percent of operators said they expect economic conditions to worsen.

Finally, 50 percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, the second consecutive month with at least half planning to make capital investments.

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Topics: Financing and capital improvements , National Restaurant Association , Operations Management , Trends / Statistics


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