Bad weather in February took a toll on consumer traffic, but the restaurant industry continued to expand based on key indicators, according to the National Restaurant Association’s monthly Restaurant Performance Index, or RPI.
In February, the RPI stood at 100.5, a decrease of 0.2 percent from January’s level of 100.7.
February marked the 12th consecutive month the composite index stood above 100. An RPI score above 100 signifies a period of expansion for the industry, while a rating below 100 indicates contraction.
“Restaurant operators continued to report net positive same-store sales results in February, despite consumer traffic levels that were challenged by the weather,” said Hudson Riehle, senior vice president of the research and knowledge group for the NRA. “Looking forward, operators are generally optimistic about sales gains in the months ahead, although they aren’t as bullish about the overall economy.”
The RPI consists of two components: The Current Situation Index and the Expectations Index.
The Current Situation Index, which looks at same-store sales, traffic, labor and capital expenditures, stood at 99.3 in February, the third consecutive month it fell below 100. The result reflects a decline of 0.2 percent from January’s level of 99.5.
Although restaurant operators reported net positive same-store sales in February, the continued softness in traffic and labor indicators outweighed the performance, the NRA said. Of the operators surveyed, 44 percent reported a same-store-sales gain in February over the prior year, while 37 percent reported a decline. It was the third consecutive month in which fewer than half of operators reported higher same-store sales.
Traffic trends, however, showed a net decline for the third consecutive month. Thirty-five percent of operators reported customer traffic growth in February compared with a year ago, while 43 percent reported a decline.
Perhaps as a result, operators reported a dip in capital spending activity. During the last three months, 44 percent of operators said they made a capital expenditure for equipment, expansion or remodeling. It was the first time in 10 months that less than a majority of operators reported making a capital expenditure.
The Expectations Index, which measures operators’ outlook over the next six months for same-store sales, employees, capital expenditures and business conditions, stood at 101.7 in February, reflecting a slight decrease from 101.8 in January. Still, the report noted that it was the 16th consecutive month in which the Expectations Index stood above 100, indicating that operators remain optimistic about the months ahead.
Forty percent of operators expect to have higher sales in six months compared with last year, roughly the same as the 41 percent who said the same in January. Meanwhile, 11 percent of operators expect their sales volume in six months to be lower, while 49 percent expect their sales to remain about the same.
When asked about the economy, 29 percent of restaurant operators said they expect economic conditions to improve in six months, while 16 percent expect conditions to get worse. The remaining 55 percent are expecting more of the same.
Following the general optimism, 58 percent of operators said they plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, falling slightly from 64 percent who said the same in January.
The RPI report is released on the last business day of each month. A more detailed analysis can be found at Restaurant Trendmapper.
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