NRA Says RPI Shows Solid Gains In October, Driven By Stronger Traffic
By Christine Kern, contributing writer
Restaurant operators exhibit guarded optimism about economic growth.
The National Restaurant Association’s Restaurant Performance Index increased 1.8% in October, rebounding from a decline of 0.9% in September, amid stronger traffic levels and growing operator optimism, according to a press release.
As the press release explained, the R.P.I. was above 100 for the 20th consecutive month, signifying expansion in the index of key industry indicators. The index is composed of two elements: the Current Situation Index (CSI) and the Expectations Index (EI).
“The positive same-store sales and customer traffic results suggest that restaurants are the beneficiaries of falling gas prices, which were down 88c since the end of June,” said Hudson Riehle, senior vice-president of the Research and Knowledge Group for the N.R.A. “Elevated food costs continue to top the list of challenges reported by restaurant operators, but overall they remain generally optimistic that business conditions will improve in the months ahead.”
Lower gas prices, which have fallen 88 cents since June, appear to have factored into rising restaurant sales and traffic.
The CSI rose 2.1 percent from September to 103.1 in October. It was also the eighth consecutive month in which it registered over 100.
Meanwhile, seventy-one percent of restaurant operators reported a same-store sales gain between October 2013 and October 2014, up from 63 percent over August, while only 11 percent of operators reported a same-store sales decline in October, a decrease of 23 percent from September.
Restaurant operators also reported stronger customer traffic results in October. Fifty-five percent of restaurant operators reported an increase in customer traffic between October 2013 and October 2014, up from 40 percent who reported higher traffic in September. In contrast, only 16 percent of operators said their traffic declined in October, down from 33 percent who reported similarly in September, according to the Nation’s Restaurant News.
The report also showed that capital spending was up among restaurant operators, with fifty-seven percent reporting capital expenditures during the past three months, an increase of almost 50 percent over September.
The EI, rose 1.6 percent over September’s level to 102.5 in October, the 24th consecutive month in which the EI stood above 100.
Fifty-two per cent of restaurant operators anticipated higher sales in six months (compared to the same period in the previous year), up from 40 percent who reported similarly last month, while only 6 percent anticipated their sales volume to be lower, down from 8 percent last month, as Food Business News reported.
The report also demonstrated that there is a sense of growing optimism among restaurant operators about the direction of the economy. Thirty-five percent of restaurant operators anticipate economic conditions to improve in six months, a rise of 15 percent from September levels, and the highest level in more than two years. Less than 10 percent predict economic contraction in the next six months, while 57 percent believe that the economic conditions will remain stable.
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.