Despite softer same-store sales and customer traffic levels, restaurant operators remain optimistic about business conditions in months ahead
Washington, DC (RestaurantNews.com) Although same-stores sales and customer traffic levels softened somewhat in May, the National Restaurant Association’s Restaurant Performance Index (RPI) remained in positive territory. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.3 in May, down 0.4 percent from a level of 102.7 in April. Despite the decline, May represented the 27th 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.
“The outlook for the restaurant industry remains positive, as the RPI stood above the 102 level for the 8th consecutive month,” said Hudson Riehle, Senior Vice President of the Research and Knowledge Group for the Association. “A majority of restaurant operators reported higher same-store sales in May, and operators are generally optimistic about an improving business environment in the months ahead.”
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 102.6 in May – down 0.2 percent from April. However, the Current Situation Index stood above 100 for the 15th consecutive month, which signifies expansion in the current situation indicators.
- Same-store sales: For the 15th consecutive month, a majority of restaurant operators reported higher same-store sales, though May’s results were somewhat softer than April. Sixty-seven percent of restaurant operators reported a same-store sales gain between May 2014 and May 2015, down from 71 percent who reported higher sales in April. In comparison, 19 percent of operators reported a same-store sales decline in May, up from 13 percent in April.
- Customer traffic: Restaurant operators also reported softer customer traffic results in May. Fifty-two percent of restaurant operators reported an increase in customer traffic between May 2014 and May 2015, down from 55 percent who reported higher traffic in April. Thirty-one percent of operators said their traffic declined in May, up from 25 percent in April.
- Capital spending: In addition to positive same-store sales and customer traffic levels in recent months, capital spending also remained at elevated levels. Sixty percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which marked the eighth 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 102.0 in May – down 0.5 percent from a level of 102.5 in April. Despite the decline, May represented the 31st consecutive month in which the Expectations Index stood above 100, which indicates a positive outlook for business conditions in the months ahead.
- Sales outlook: Restaurant operators remain generally optimistic that their sales will improve in the coming months. Forty-seven percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 52 percent from last month. Meanwhile, 9 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, up slightly from 6 percent last month.
- Overall economy: Restaurant operators’ outlook for the overall economy is somewhat less bullish than their sales expectations. Thirty percent of restaurant operators said they expect economic conditions to improve in six months, up slightly from 28 percent last month. Eleven percent expect economic conditions to worsen in six months, while the remaining 59 percent expect economic conditions in six months to be about the same as they are now.
- Capital expenditure planning: For the 21st consecutive month, a majority of restaurant operators said they are planning for capital expenditures in the months ahead. Fifty-four percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 59 percent who reported similarly last month.
About the RPI
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 website that provides detailed analysis of restaurant industry trends.
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 1 million restaurant and foodservice outlets and a workforce of 14 million employees. We represent the industry in Washington, D.C., and advocate on its behalf. We operate the industry’s largest trade show (NRA Show May 21-24, 2016, in Chicago); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF’s ProStart); as well as the Kids LiveWell program promoting healthful kids’ menu options. For more information, visit Restaurant.org and find us on Twitter @WeRRestaurants, Facebook and YouTube.