Restaurant traffic continues on a positive trajectory

June 2, 2014

Driven by improving same-store sales and customer traffic and a positive outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index rose for the second consecutive month. The RPI stood at 101.7 in April, up 0.3 percent from March and the strongest level since May 2013. In addition, the RPI stood above 100 for the 14th consecutive month.

“The recent rise in the RPI was fueled by improvements in same-store sales and customer traffic, which are back on a positive trajectory after the winter soft patch,” Hudson Riehle, SVP of Research and Knowledge Group for the NRA, said in a news release. “In addition, restaurant operators have an optimistic outlook for business conditions in the months ahead, which is reflected by the expectations component of the RPI rising to its highest level in two years.”

Current Situation Index

The Current Situation Index, which measures same-store sales, traffic, labor and capital expenditures, stood at 101.3 in April — up 0.5 percent from a level of 100.8 in March.

Fifty-one percent of restaurant operators reported a same-store sales gain between April 2013 and April 2014, while 26 percent reported a sales decline. In March, 55 percent reported higher same-store sales, while 32 percent said their sales declined.   

Respondents reported a net gain in customer traffic levels for the second straight month, after registering declines in the previous three months. Forty-four percent reported an increase in customer traffic levels between April 2013 and April 2014, while 30 percent reported a decline. In March, 46 percent of operators said their traffic rose from the previous year, while 33 percent reported a decline.

Along with positive trends in sales and customer traffic, restaurant operators reported continued growth in capital expenditures: 56 percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 49 percent who reported similarly last month.

Expectations Index

The Expectations Index, which measures restaurant operators’ six-month outlook, stood at 102.2 in April — up 0.2 percent from March and the strongest level in two years. In addition, April represented the 18th consecutive month in which the Expectations Index stood above 100, which indicates that operators are optimistic about business conditions in the coming months. 

Forty-six percent said they expect to have higher sales in six months (compared to the same period in the previous year), down slightly from 49 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, compared to just 6 percent last month.

In comparison, respondents are somewhat less bullish about the overall economy — 30 percent said they expect economic conditions to improve in six months, while 15 percent expect the economy to worsen. The remaining 55 percent expect economic conditions to remain generally unchanged in the next six months. 

For the eighth consecutive month, a majority of restaurant operators are planning for capital expenditures in the coming months. Sixty percent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 58 percent who reported similarly last month.

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

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