Strengthening same-store sales and traffic trends coupled with a more optimistic outlook among restaurant operators boosted the National Restaurant Association’s Restaurant Performance Index in October to the highest level since June.

The RPI, a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry, was at 100.9 in October, an increase of 0.7 percent from September and a four-month high.

In addition, the RPI stood above 100 for the eighth consecutive month, a positive trend that signifies expansion in key industry indicators, according to the NRA.

“The RPI’s October gain was driven by broad-based gains in the index components, most notably solid improvements in same-store sales and customer traffic,” said Hudson Riehle, senior vice president of the NRA’s research and knowledge group. “Looking forward, restaurant operators are relatively optimistic about sales growth in the months ahead, though their outlook for the overall economy remains mixed.”

The RPI includes two components: the Current Situation Index, which measures current trends among same-store sales, traffic, labor and capital expenditures; and the Expectations Index, which measures the outlook of operators over the next six months on indicators like same-store sales, employees, capital expenditure and business conditions.

The Current Situation Index was 100.9 in October, rising 1.0 percent from 99.9 in September to reach its highest level in five months.

A majority of restaurant operators reporting for the index had higher same-store sales for the month, showing solid improvement over a more tumultuous September.

Fifty-four percent of operators said they had same-store sales gains in October compared with the same month in 2012, an increase from 41 percent reporting gains in September over the prior year. Conversely, 30 percent of operators reported a decline in same-store sales in October, falling from 40 percent in September, the NRA said.

Restaurant traffic also improved in October, with 43 percent of operators reporting higher traffic levels compared to the previous year, rising from 33 percent reporting traffic improvement in September. Similarly, fewer operators reported traffic declines: 39 percent said traffic fell in October compared with 44 percent who reported a drop in September’s guest count.

A majority of restaurant operators also said they made capital expenditures over the past three months, with 57 percent investing in equipment, expansion or remodeling.

Restaurant operators indicated their outlook for the next six months is generally positive. The Expectations Index stood at 100.9 for October, rising 0.4 percent from September. October also represented the 12th consecutive month in which the Expectations Index remained over 100.

On sales growth expectations, however, operators were more cautiously optimistic, the NRA said. In the next six months, 36 percent of those surveyed said they expect to have higher sales compared with the same period a year ago, a slight increase from 34 percent who said the same in September.

Only 11 percent of operators surveyed said they expect their sales volume to decline in six months, compared to 13 percent in September who predicted similar declines ahead.

Still, operators remain mixed about the direction of the economy, with 27 percent saying they expect economic conditions to improve in six months, and 26 percent expecting the situation to get worse.

Despite that mixed view, 53 percent of operators said they are planning for capital expenditures within the next six months, a slight increase from 52 percent who said the same in September.

The RPI is based on the NRA’s monthly Tracking Survey, which includes responses from restaurant operators nationwide.

Contact Lisa Jennings at lisa.jennings@penton.com.
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