Restaurant performance at highest level in six years

Jan. 31, 2012

Fueled by solid same-store sales and traffic results and a bullish outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index (RPI) rose sharply in December.

The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.2 in December, up 1.6 percent from November and its highest level in nearly six years.

In addition, December represented the third time in the last four months that the RPI stood above 100, which signifies expansion in the index of key industry indicators.

"Aided by favorable weather conditions in many parts of the country, a solid majority of restaurant operators reported higher same-store sales and customer traffic levels in December," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. "In addition, restaurant operators are solidly optimistic about sales growth in the months ahead, and their outlook for the economy is at its strongest point in nearly a year."

He added that solid November and December results bode well for continued momentum in 2012.

"The ripple effect will likely be felt throughout the supply chain as well, with restaurant operators' plans for capital spending rising to its highest level in more than four years," Riehle said.

Current Situation Index

The Current Situation Index, which measures same-store sales, traffic, labor and capital expenditures, stood at 102.1 in December – up 1.9 percent from November and its strongest level in seven years.

Sixty-nine percent of restaurant operators reported a same-store sales gain between December 2010 and December 2011, while only 18 percent reported a same-store sales decline. This marked the strongest net positive sales performance since February 2004, when 70 percent of operators reported a sales gain and 17 percent reported lower sales.

Fifty-seven percent of restaurant operators reported higher customer traffic levels between December 2010 and December 2011, while just 23 percent reported a traffic decline.

In addition, capital spending activity among restaurant operators continues to trend upward. Forty-eight percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the highest level in six months.

Expectations Index

The Expectations Index, which measures restaurant operators' six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 102.3 in December – up 1.3 percent from November and its highest level in a year.

In addition, December marked the fourth consecutive month that the Expectations Index stood above 100.

For the first time in a year, a majority of restaurant operators expect their sales to be higher in the months ahead. Fifty-one percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 41 percent who reported similarly last month.

Restaurant operators are also beefing up plans for capital spending. Fifty-five percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 47 percent last month and the strongest level in more than four years.

Read more about trends and statistics.

Topics: Financing and capital improvements , National Restaurant Association , Operations Management , Trends / Statistics

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