Restaurant traffic levels hit 5-month high in November

 
Jan. 2, 2014

Driven by improving same-store sales and customer traffic levels, the National Restaurant Association's Restaurant Performance Index hit a five-month high in November. The RPI stood at 101.2 in November, up 0.3 percent from October and the strongest level since June. In addition, the RPI stood above 100 for the ninth consecutive month, which signifies expansion in the index of key industry indicators.

"Recent growth in the RPI was fueled in large part by improving same-store sales and customer traffic levels," Hudson Riehle, SVP of the Research and Knowledge Group for the NRA, said in a news release. "In addition, restaurant operators are somewhat more confident that sales levels will improve, and a majority plan to make a capital expenditure in the next six months."

The RPI 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 101.2 in November — up 0.3 percent from a level of 100.9 in October and the highest level in six months. Aside from September's downtick, the Current Situation Index remained above 100 in seven of the last eight months, which represents expansion in the current situation indicators.

A majority of restaurant operators reported higher same-store sales for the second consecutive month in November. Fifty-seven percent reported a same-store sales gain between November 2012 and November 2013, up from 54 percent in October and the highest level in six months. In comparison, 29 percent reported a decline in same-store sales in November, compared to 30 percent in October.

Respondents also reported improving customer traffic levels in November: 47 percent of restaurant operators reported customer traffic growth between November 2012 and November 2013, up from 43 percent who reported a traffic gain in October. In comparison, 35 percent reported a decline in customer traffic in November, down from 39 percent in October.

Along with higher sales and customer traffic, operators continued to report positive capital spending levels. Fifty-four percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the seventh consecutive month in which a majority of operators reported making expenditures.

Expectations Index

The Expectations Index, which measures restaurant operators' six-month outlook for the four industry indicators, stood at 101.1 in November — up 0.2 percent from a level of 100.9 in October. In addition, November represented the 13th consecutive month in which the Expectations Index stood above 100.

Restaurant operators are generally positive about sales expectations in the months ahead. Thirty-eight percent expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 36 percent who reported similarly last month. Meanwhile, only 9 percent expect their sales volume in six months to be lower than it was during the same period in the previous year, while 53 percent expect their sales to remain about the same.

In comparison, operators are less optimistic about the direction of the economy. Twenty-four percent said they expect economic conditions to improve in six months, while 19 percent expect the economy to worsen. The remaining 57 percent expect the economy to continue trending sideways during the next six months.

Despite an uncertain economic outlook, a majority of restaurant operators are planning for capital expenditures in the coming months. Fifty-five percent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 53 percent who reported similarly last month.

Read more about trends and statistics.


Topics: National Restaurant Association , Operations Management , Trends / Statistics


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