The restaurant industry expanded in January as operator expectations outweighed a decline in traffic during the month, the National Restaurant Association said Monday.
The association’s Restaurant Performance Index moved back over 100 in January, which is the point at which the trade group considers the industry to be expanding. For the month, the index was 100.6, an 80-basis-point improvement over December, when the index was 99.7.
Operators who participated in the association’s monthly survey gave a mixed outlook on sales and traffic during the month.
Only 31 percent of operators during the month said that traffic increased, while 51 percent said traffic fell, roughly the same as in December. Meanwhile, 44 percent of operators said same-store sales improved during the month, and 43 percent said same-store sales declined.
As a result of poor sales and traffic, the NRA’s Current Situation Index was 99.7, a slight increase from December, but still below 100.
Despite the sales performance, operator expectations improved during the month. The Expectations Index increased 1.3 percentage points in January, to 101.5.
According to the NRA, 39 percent of operators expect higher sales in six months, an increase from 27 percent last month, and the highest level of expectations in three months. Seventeen percent of operators expect sales volume to be lower, and 44 percent expect sales volume to be the same.
Operators were more pessimistic about the direction of the economy, with 23 percent saying they expect conditions to improve and 26 percent expecting conditions to worsen.
Despite the mixed sales and outlook, operators continue to plan expansions, with 65 percent of operators expecting to make a capital expenditure for expansion, equipment or remodeling over the next six months.
The sales results for January were expected, given a snowstorm that hammered the East Coast for a week during the month, which likely took a toll on sales.
The expansion survey is further indication of an industry that continues to grow. Hudson Riehle, senior vice president of research at the NRA, noted that restaurants added 46,700 jobs in January and 383,500 positions for the past year. “That averages out to about 1,000 jobs a day over the past year,” he said.
It also significantly outpaces employment growth overall. Employment growth in the restaurant industry was 3.5 percent in January, compared with 1.9 percent for the overall economy.
Meanwhile, operators are benefiting from higher menu prices and lower costs. Wholesale food prices fell 3.7 percent in January, Riehle noted, but menu prices rose 2.7 percent. By comparison, grocery store prices fell by 0.5 percent.
The RPI is a monthly statistical barometer that measures the overall health of the restaurant industry. The index is based on the association’s tracking survey.
Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze
