Majority of restaurant operators reported higher same-store sales
As a result of higher same-store sales and a continued optimistic outlook for future business conditions, the National Restaurant Association’s Restaurant Performance Index (RPI) remained in positive territory in March. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.2 in March, down 0.4 percent from February’s level of 102.6. Despite the decline, March marked the 25th consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators.
For the full outlook on the restaurant industry, view the Restaurant Performance Index here: http://www.restaurant.org/RPI.
“Although a majority of restaurant operators reported higher same-store sales in March, customer traffic levels were somewhat dampened,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Looking forward, restaurant operators remain solidly optimistic about future business conditions, with six in 10 expecting to have higher sales in six months.”
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 101.8 in March – down slightly from a level of 102.0 in February. Despite the decline, the Current Situation Index stood above 100 for the 13th consecutive month, which signifies expansion in the current situation indicators.
A majority of restaurant operators reported higher same-store sales for the 13th consecutive month in March, with results coming in similar to February’s performance. Sixty-two percent of restaurant operators reported a same-store sales gain between March 2014 and March 2015, while 24 percent reported lower sales. In February, 60 percent of operators reported higher same-store sales, while 24 percent reported a sales decline.
While same-store sales remained solidly positive, restaurant operators reported dampened customer traffic results in March. Forty-five percent of restaurant operators reported an increase in customer traffic between March 2014 and March 2015, down from 57 percent who reported higher traffic in February. Thirty-four percent of operators said their traffic declined in March, up slightly from 32 percent in February.
With same-store sales and customer traffic trending upward in recent months, restaurant operators beefed up capital spending. Fifty-six percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which marked the sixth 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 102.6 in March – down 0.7 percent from February’s level of 103.3. Despite the decline, March represented the 29th consecutive month in which the Expectations Index stood above 100, which indicates a positive outlook for business conditions in the coming months.
Restaurant operators remain solidly optimistic about sales growth in the coming months. Fifty-nine percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), unchanged from last month. In contrast, only 3 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, down from 4 percent last month.
Restaurant operators are also generally optimistic about the direction of the overall economy. Thirty-five percent of restaurant operators said they expect economic conditions to improve in six months, down slightly from 37 percent last month. Only 8 percent expect economic conditions to worsen in six months, while the remaining 57 percent expect economic conditions in six months to be about the same as they are now.
For the 19th consecutive month, a majority of restaurant operators said they are planning for capital expenditures in the months ahead. Fifty-three percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down from 64 percent who reported similarly last month.
The RPI is based on the responses to the National Restaurant Association’s Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. The full report and video summary are available online at Restaurant.org/RPI.
The RPI is released on the last business day of each month, and a more detailed data and analysis can be found on Restaurant TrendMapper, the Association’s subscription-based web site that provides detailed analysis of restaurant industry trends.