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As a result of softer same-store sales and customer traffic levels, the National Restaurant Association's Restaurant Performance Index (RPI) declined in September.
The RPI — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 100.4 in September, down 0.3 percent from August. Despite the decline, September represented the 11th consecutive month that the RPI stood above 100, which signifies continued expansion in the index of key industry indicators.
"Although restaurant operators reported softer same-store sales and customer traffic levels in September, they are somewhat more bullish about sales growth in the months ahead," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. "Forty-five percent of restaurant operators expect their sales to improve in the next six months, while only 11 percent expect weaker sales."
The Index consists of two components — the Current Situation Index and the Expectations Index.
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 99.9 in September – down 0.7 percent from a level of 100.6 in August. Although same-store sales remained positive in September, the softness in the labor and customer traffic indicators outweighed the performance, which led to an index reading below 100 for the second time in the last three months.
Although operators reported positive same-store sales for the 16th consecutive month in September, results were much softer than recent months. Forty-eight percent reported a same-store sales gain between September 2011 and September 2012, down from 61 percent in August and the level proportion in 11 months. In comparison, 35 percent reported lower same-store sales in September, up from 25 percent in August.
While sales remained positive overall, operators reported a net decline in customer traffic levels in September. Thirty-six percent reported higher customer traffic levels between September 2011 and September 2012, down from 47 percent who reported positive traffic in August. Meanwhile, 41 percent reported lower customer traffic levels in September, up from 32 percent in August.
Despite the softer sales and traffic results, restaurant operators reported an uptick in capital spending activity. Forty-nine percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 41 percent who reported similarly last month.
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 100.9 in September – up 0.2 percent from August.
Operators are somewhat more optimistic that their sales levels will improve in the months ahead. Forty-five percent expect to have higher sales in six months (compared to the same period in the previous year), up from 40 percent last month and the strongest level in three months. Meanwhile, only 11 percent expect their sales volume in six months to be lower than it was during the same period in the previous year, essentially unchanged from 12 percent last month.
In contrast to their generally positive outlook for sales, operators are more uncertain about the direction of the overall economy. Only 26 percent said they expect economic conditions to improve in six months, down slightly from 29 percent last month. Meanwhile, 18 percent said they expect economic conditions to worsen in the next six months, while 56 percent think conditions will stay about the same.
Restaurant operators' outlook for capital spending remained steady. Forty-four percent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, unchanged from last month.
Read more about trends and statistics.