WASHINGTON, Oct. 30, 2015 (hospitalitybusinessnews.com) — Although same-store sales and customer traffic remained positive in September, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a modest decline. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.4 in September, down slightly from a level of 101.5 in August. Despite the decline, September represented the 31st consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators.
“The RPI’s current situation indicators continued to illustrate growth in September, as both same-store sales and customer traffic remained positive,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “However, restaurant operators are more cautious about business conditions in the months ahead, as the proportion expecting a sales increase fell to a two-year low.”
The RPI is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators. The Index consists of two components – the Current Situation Index and the Expectations Index.
Current Situation Index
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 101.3 in September – down slightly from a level of 101.4 in August. Despite the modest dip, the Current Situation Index remained above 100 for the 19th consecutive month, which signifies expansion in the current situation indicators.
- Same-store sales: A majority of restaurant operators reported higher same-store sales for the 19th consecutive month in September, with results coming in similar to the August performance. Fifty-one percent of restaurant operators reported a same-store sales gain between September 2014 and September 2015, down from 56 percent who reported higher sales in August. In comparison, 27 percent of operators reported a same-store sales decline in September, down from 32 percent in August.
- Customer traffic: Restaurant operators also reported similar customer traffic results between August and September. Forty-two percent of restaurant operators reported an increase in customer traffic between September 2014 and September 2015, up slightly from 41 percent who reported higher traffic in August. Thirty-eight percent of operators said their traffic declined in September, compared to 37 percent in August.
- Capital spending: Along with higher sales and traffic levels, capital spending activity remained positive in September. Sixty-six percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which marked the 12th consecutive month in which a majority of operators reported making an expenditure.
The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 101.4 in September – down slightly from a level of 101.6 in August. However, September represented the 35th consecutive month in which the Expectations Index stood above 100, which indicates restaurant operators remain generally positive about overall business conditions in the months ahead.
- Sales outlook: Although the overall outlook is positive, the proportion of restaurant operators expecting their sales to rise steadily declined in recent months. Thirty-five percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 44 percent last month and the lowest level in two years. Twelve percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, while 53 percent expect their sales to remain about the same.
- Overall economy: Similarly, restaurant operators have mixed opinions about the direction of the overall economy. Sixteen percent of restaurant operators said they expect economic conditions to improve in six months, while 16 percent expect conditions to worsen. This represented the fourth consecutive month of a sluggish economic outlook.
- Capital expenditure planning: While their overall outlook is mixed, a majority of restaurant operators said they are planning for capital expenditures in the months ahead. Sixty-two percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 60 percent who reported similarly last month.