Restaurant performance outlook posts modest improvement

 
Oct. 28, 2010

Driven by improving same-store sales and customer traffic levels, as well as growing optimism among restaurant operators, the outlook for the restaurant industry improved in September.  The National Restaurant Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.3 in September, up a solid 0.8 percent from its August level.  In addition, the RPI rose above 100 for the first time in five months, signifying expansion in the index of key industry indicators.

“The RPI’s solid gain in September was the result of broad-based improvements among both the current situation and forward-looking indicators,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association. “Restaurant operators reported positive same-store sales and customer traffic levels for the first time in six months, which propelled the RPI’s Current Situation Index to its highest level in nearly three years.

“In addition, restaurant operators are more optimistic about sales growth in the months ahead, while their outlook for the economy rose to its strongest level in five months.”

The Current Situation Index measures current trends in four industry indicators -- same-store sales, traffic, labor and capital expenditures -- and stood at 99.4 in September, up 0.5 percent from August and its strongest level since October 2007. However, the index remained below 100 for the 37th consecutive month, as the softness in the labor and capital expenditure indicators outweighed the gains in same-store sales and customer traffic. 

Restaurant operators reported a net increase in same-store sales for the first time in six months in September. 

  • 44 percent of restaurant operators reported a same-store sales gain between September 2009 and September 2010, up from 38 percent of operators who reported higher sales in August.
  • 38 percent of operators reported a same-store sales decline in September, down from 43 percent of operators who reported negative sales in August.   

Restaurant operators also reported a slight uptick in customer traffic levels in September. 

  • 38 percent of restaurant operators reported an increase in customer traffic between September 2009 and September 2010, while 37 percent of operators reported a traffic decline. 
  • In August, 35 percent of operators reported an increase in customer traffic levels, while 42 percent reported a traffic decline.

Despite the improvements in sales and traffic levels, restaurant operators reported a slight dropoff in capital spending levels in recent months.

  • 42 percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 44 percent of operators 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 101.1 in September – up 1.0 percent from August and its strongest level in five months.

Restaurant operators are more optimistic about an improving sales environment in the months ahead 

  • 43 percent of restaurant operators expect to have higher sales in six months (compared with the same period in the previous year), up from 38 percent who reported similarly last month.
  • 14 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, compared with 17 percent who reported similarly last month.

Restaurant operators are also more bullish about the direction of the overall economy. 

  • 38 percent of restaurant operators said they expect economic conditions to improve in six months, up from 25 percent last month and the strongest level of optimism in five months. 
  • Just 16 percent of operators said they expect economic conditions to worsen in the next six months, down from 21 who reported similarly last month. 

Along with an improving outlook for sales and the economy, restaurant operators’ plans for capital expenditures also grew. Forty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 42 percent who reported similarly last month and the strongest level in five months. 




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


Related Content


Latest Content


comments powered by Disqus

 

TRENDING

 

WHITE PAPERS