Weather dampened restaurant traffic in January

Feb. 28, 2014

One theme touched upon during most recent earnings calls has been the severe winter weather's impact on restaurant traffic. According to the National Restaurant Association's Restaurant Performance Index, that impact in January was very real.

"Current situation indicators such as customer traffic were dampened in January, due in large part to adverse weather conditions," Hudson Riehle, SVP of Research and Knowledge Group for the NRA, said in a news release.

Still, restaurant operators are more optimistic about business conditions in the months ahead, which is reflected in increased plans for capital spending.

The RPI — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 100.7 in January, up 0.2 percent from December's level of 100.5. In addition, the RPI remained above 100 for the 11th consecutive month.

Current Situation Index

The Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures, stood at 99.5 in January — unchanged from December and the second consecutive month below 100. Although operators reported net positive same-store sales in January, softness in the customer traffic and labor indicators outweighed the performance.

Respondents reported net positive same-store sales for the 11th consecutive month in January, but results remained relatively dampened overall. Forty-five percent reported a same-store sales gain between January 2013 and January 2014, while 40 percent of operators reported a sales decline. In December, 44 percent of operators reported higher same-store sales, while 41 percent reported a decline.

Restaurant operators reported a net decline in customer traffic for the second consecutive month: 33 percent reported traffic growth between January 2013 and January 2014, while 50 percent reported a traffic decline. In December, 30 percent reported higher customer traffic levels, while 46 percent reported a decline.

Despite the softer sales and traffic levels, restaurant operators continued to report positive capital spending levels. Fifty-seven percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the ninth consecutive month in which a majority of operators reported making expenditures.

Expectations Index

With spring on the horizon, the Expectations Index was at 101.8 in January – up 0.3 percent from December and the highest level in seven months.

Respondents are somewhat more optimistic about sales growth in the months ahead, with 41 percent expecting to have higher sales in six months (compared to the same period in the previous year), up from 38 percent who reported similarly last month. Meanwhile, 11 percent expect their sales volume in six months to be lower than it was during the same period in the previous year, while 48 percent expect their sales to remain about the same.

In comparison, restaurant operators are somewhat less optimistic about the direction of the economy. Twenty-nine percent of restaurant operators said they expect economic conditions to improve in six months, while 20 percent expect the economy to worsen. The remaining 51 percent expect economic conditions to remain generally unchanged in the next six months.

A majority — 64 percent — of operators are planning for capital expenditures in the months ahead, either for equipment, expansion or remodeling, up from 61 percent who reported similarly last month.

Topics: National Restaurant Association , Operations Management , Trends / Statistics

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