Although challenging weather conditions in many parts of the country continued to impact customer traffic in February, the National Restaurant Association's Restaurant Performance Index remained above 100 for the 12th consecutive month.
According to a news release, the RPI — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 100.5 in February, down 0.2 percent from January's level of 100.7. Despite the modest decline, the fact that the overall RPI remains above 100 continues to signify expansion in the index of key industry indicators.
"Restaurant operators continued to report net positive same-store sales results in February, despite customer traffic levels that were challenged by the weather," Hudson Riehle, SVP of the Research and Knowledge Group for the NRA, said in the release. "Looking forward, operators are generally optimistic about sales gains in the months ahead, although they aren't as bullish about the overall economy."
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 99.3 in February — down 0.2 percent from January's level of 99.5 and the third consecutive month below 100. Although operators reported net positive same-store sales in February, continued softness in the customer traffic and labor indicators outweighed the performance.
Although results were mixed in February, operators reported net positive same-store sales for the 12th consecutive month. Forty-four percent reported a same-store sales gain between February 2013 and February 2014, while 37 percent reported a sales decline. February marked the third consecutive month in which fewer than half of restaurant operators reported higher same-store sales.
In contrast, operators reported a net decline in customer traffic for the third consecutive month. Thirty-five percent reported customer traffic growth between February 2013 and February 2014, while 43 percent reported a traffic decline. In January, 33 percent reported higher customer traffic levels, while 50 percent reported a decline.
After three consecutive months of dampened customer traffic levels, restaurant operators reported a dip in capital spending activity. Forty-four percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the first time in 10 months that less than a majority of operators reported making an expenditure.
The Expectations Index stood at 101.7 in February — down slightly from January's level of 101.8. Despite the modest downtick, February represented the 16th consecutive month in which the Expectations Index stood above 100, which indicates that restaurant operators remain optimistic about business conditions in the coming months.
Operators remain cautiously optimistic about sales growth in the months ahead: 40 percent expect to have higher sales in six months (compared to the same period in the previous year), essentially unchanged from 41 percent who reported similarly last month. Meanwhile, 11 percent expect their sales volume in six months to be lower than it was during the same period in the previous year, while 49 percent expect their sales to remain about the same.
Meanwhile, operators are somewhat less bullish about the direction of the economy: 29 percent said they expect economic conditions to improve in six months, while 16 percent expect the economy to worsen. The remaining 55 percent expect economic conditions to remain generally unchanged in the next six months.
Along with a generally optimistic sales outlook, a majority of restaurant operators are planning for capital expenditures in the coming months. Fifty-eight percent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 64 percent who reported similarly last month.