Optimism about the year ahead drove a modest gain in January’s Restaurant Performance Index, or RPI, despite traffic declines likely caused by bad winter weather, the National Restaurant Association said Friday.
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, a 0.2-percent increase from December’s rate of 100.5. It was the 11th consecutive month the index remained above 100, signifying expansion in the index of key industry indicators.
“Restaurant operators are more optimistic about business conditions in the months ahead, which is also reflected in ramped-up plans for capital spending,” said Hudson Riehle, senior vice president of the NRA’s research and knowledge group. “However, current situation indicators such as customer traffic were dampened in January due in large part to adverse weather conditions.”
The RPI consists of two components: the Current Situation Index and the Expectations Index.
The Current Situation Index was 99.5 for January, which was unchanged from December and the second consecutive month it was below 100, representing a period of contraction for the key indicators. This represents a period of contraction for the index’s key indicators, which include restaurant same-store sales, traffic, labor and capital expenditures.
Restaurant operators surveyed for the RPI reported net positive same-store sales for January, but softness in customer traffic and labor indicators outweighed the performance, resulting in the reading below 100.
Compared with January 2013, 45 percent of operators recorded an increase in same-store sales, while 40 percent saw a decline. It was a slight improvement over December, when 44 percent of operators reported higher same-store sales and 41 percent reported a decline. Consumer traffic, however, fell for the second month in a row, with only 33 percent of restaurant operators reporting traffic growth in January and 50 percent reporting traffic declines.
Still, restaurant operators say they are increasing capital spending. In January, 57 percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months. It was the ninth consecutive month in which a majority of operators reported such capital investment.
The Expectations Index, which measures the six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 101.8 in January, rising 0.3 percent from December and reaching the highest level in seven months.
January was the 15th consecutive month in which the Expectations Index stood above 100, indicating optimism across the industry overall.
Forty-one percent of operators said they were more optimistic about sales growth in the months ahead, rising from 38 percent who said the same last month. Meanwhile, 11 percent of operators expect their sales volume over the next six months to be lower than the same period last year, while 48 percent expect it to remain the same.
Continuing that optimism, 64 percent of operators said they plan to make a capital expenditure within the next six months, rising from 61 percent in December. Still, their outlook for the economy has soured somewhat.
The survey found that 29 percent of restaurant operators said they expect economic conditions to improve in six month, while 20 percent expect things to get worse. The remaining 51 percent expect no change.
The RPI is based on the NRA’s monthly Tracking Survey. A more detailed analysis can be found at Restaurant TrendMapper.
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