Same-store sales and customer traffic remained positive; Restaurant operators are generally optimistic about sales growth in the months ahead
WASHINGTON, July 31, 2013 /PRNewswire-USNewswire/ -- As a result of positive sales and traffic and an optimistic outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index (RPI) remained in expansion territory in June. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.3 in June, down 0.5 percent from May's level of 101.8. Despite the decline, June represented the fourth consecutive month that the RPI exceeded the 100 level, which signifies expansion in the index of key industry indicators.
"Although the overall RPI dipped somewhat in June, it remained in positive territory as restaurant operators continued to report gains in both sales and customer traffic," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "Looking forward, restaurant operators remain generally optimistic about the business environment in the months ahead, with the Expectations Index holding steady at a 12-month high."
The RPI is constructed so that the health of the restaurant industry 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.
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 100.7 in June – down 0.9 percent from a level of 101.6 in May. Despite the decline, the Current Situation Index remained above 100 for the third consecutive month, which signifies expansion in the current situation indicators.
Although a majority of restaurant operators reported higher same-store sales in June, the results were somewhat softer than the solid May results. Fifty-two percent of restaurant operators reported a same-store sales gain between June 2012 and June 2013, down from 63 percent who reported higher sales in May. In comparison, 34 percent of operators reported a decline in same-store sales in June, up from 23 percent in May.
Restaurant operators also reported softer traffic results in June. Forty-three percent of restaurant operators reported higher customer traffic levels between June 2012 and June 2013, while 39 percent of operators said their traffic declined. In May, 47 percent of operators reported an increase in customer traffic, while 30 percent reported lower traffic levels.
Despite the somewhat dampened sales and traffic results, restaurant operators reported steady capital spending levels. Fifty-two percent of operators saying they made a capital expenditure for equipment, expansion or remodeling during the last three months, unchanged from the proportion 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 102.0 in June – holding steady at the 12-month high registered in May. Each of the four expectations indicators stood above 100 for the sixth consecutive month, which indicates broad-based optimism for business conditions in the months ahead.
Restaurant operators are generally optimistic about sales growth in the months ahead. Forty-six percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), essentially unchanged from the 47 percent who reported similarly last month. Meanwhile, only 11 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 to 8 percent last month.
Restaurant operators remain somewhat less bullish about overall economic conditions. Thirty percent of restaurant operators said they expect economic conditions to improve in six months, a proportion that has remained essentially unchanged during the last six months. Sixteen percent of operators said they expect economic conditions to worsen in the next six months, up slightly from 15 percent last month.
Restaurant operators continue to ramp up plans for capital spending in the months ahead. Fifty-nine percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 57 percent who reported similarly last month.
Restaurant operators are also trending positive in their outlook for staffing levels in the coming months. Twenty-five percent of operators plan to increase staffing levels in six months (compared to the same period in the previous year), while 14 percent said they plan to cut positions.
The RPI is based on the responses to the National Restaurant Association's Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. The full report and video summary are available online at Restaurant.org/RPI.
The RPI is released on the last business day of each month, and a more detailed data and analysis can be found on Restaurant TrendMapper, the Association's subscription-based web site that provides detailed analysis of restaurant industry trends.
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 980,000 restaurant and foodservice outlets and a workforce of more than 13 million employees. We represent the industry in Washington, D.C., and advocate on its behalf. We operate the industry's largest trade show (NRA Show May 17-20, 2014, in Chicago); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF's ProStart); as well as the Kids LiveWell program promoting healthful kids' menu options. For more information, visit www.restaurant.org and find us on Twitter @WeRRestaurants, Facebook and YouTube.
SOURCE National Restaurant Association