Weather may have hurt restaurant sales in February, but it didn’t dampen operators’ outlook for their businesses and the economy, according to the latest National Restaurant Association Restaurant Performance Index.
The index was 102.6 in February, the NRA said on Tuesday, a slight decrease from January’s post-recession high of 102.7. February was the 24th consecutive month the index stood above 100, which the association said indicates that the industry is in growth mode.
“With same-store sales and customer traffic levels impacted by challenging weather conditions in parts of the country, the current situation component of the RPI declined in February,” Hudson Riehle, senior vice president of the association’s research and knowledge group, said in a statement. “However, this was offset by solid improvement in the expectations component of the index, as restaurant operators are increasingly optimistic about business conditions in the months ahead.”
The Current Situation Index, which measures operators’ current business situation, was 102.0 in February, falling from 102.7 in January. Weather, particularly in the Northeast, was largely to blame, hurting sales at many restaurants.
Nevertheless, most operators reported higher sales in February for the 12th straight month. Sixty percent of operators reported a year-over-year same-store sales gain during the month, falling from 70 percent in January, while 24 percent reported a decline, rising from 17 percent the month before.
Traffic also dampened in February, with 47 percent of operators saying traffic increased in February, falling from 66 percent in January, while 32 percent said traffic declined, increasing from 21 percent in January.
The slowdown didn’t affect hiring. Riehle noted that the industry added 58,700 jobs in February, a rate of about 1,200 a day — or 4.3-percent growth in employment for the month. By contrast, the total number of jobs in the U.S. grew 2.4 percent in February.
The NRA's Hudson Riehle breaks down the latest RPI results >>
Operators might be ramping up employment in anticipation for further economic growth. Restaurant operators are increasingly optimistic about sales growth in the coming months, with 59 percent of operators expecting higher sales in six months, rising from 57 percent who said the same in January. Only 4 percent of operators expected sales volume to fall.
Operators were generally optimistic about the overall economy. Thirty-seven percent expected conditions to improve, rising from 35 percent last month. Eleven percent expected conditions to worsen.
Meanwhile, 64 percent of restaurant operators are planning a capital expenditure in the next six months, either by adding equipment, expanding or remodeling, an increase from 57 percent in January.
As a result, the RPI’s Expectations Index was 103.3 in February, the 28th straight month it was positive. It also rose 0.5 percent from January.
Riehle said food price inflation is moderating this year. Wholesale food price inflation was 2.4 percent in February, he said, but the increase appeared concentrated in some commodities. Beef prices, for instance, rose 21 percent year-to-date over the previous year. Cheese prices fell 15 percent.
Restaurants have largely responded by raising menu prices. Menu price inflation increased 3.1 percent in February, the same rate as grocery inflation, Riehle said. But the figure was well above overall inflation, which has fallen 0.1 percent year-to-date, largely due to declines in energy costs.
Contact Jonathan Maze at [email protected]
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