The National Restaurant Association’s Restaurant Performance Index (RPI) rose to its highest level in more than three years in October when it reached 100.7, up 0.4 from September. This is the second consecutive month where the RPI stood at more than 100.
A monthly composite index that tracks the health of and outlook for the U.S. restaurant industry, the RPI consists of two basic 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 100.0 in October – up 0.6 percent from September and its second consecutive solid gain. In addition, the Current Situation Index reached the 100 level for the first time since August 2007.
Restaurant operators reported a net increase in same-store sales for the second consecutive month in October. Fifty-one percent of restaurant operators reported a same-store sales gain between October 2009 and October 2010, up from 44 percent of operators in September and the first time since August 2007 that a majority of operators reported higher same-store sales. Meanwhile, only 33 percent of operators reported a same-store sales decline in October, down from 38 percent of operators who reported negative sales in September.
Forty-four percent of restaurant operators reported an increase in customer traffic between October 2009 and October 2010, up from 38 percent of operators who reported higher traffic in September. In comparison, 34 percent of operators reported a traffic decline in October, down from 37 percent in September.
While sales and traffic levels improved, capital spending activity remained relatively steady. Forty-two percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the past three months, matching the proportion 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 101.4 in October – up 0.3 percent from September and its strongest level in six months.
Restaurant operators remain solidly optimistic about sales growth in the months ahead. Forty-three percent of restaurant operators expect to have higher sales in six months (compared with the same period in the previous year), matching the proportion who reported similarly last month. Meanwhile, just 12 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, down slightly from 14 percent who reported similarly last month.
Restaurant operators also remain relatively optimistic about the direction of the overall economy. Thirty-five percent of restaurant operators said they expect economic conditions to improve in six months, down slightly from 38 percent last month. In comparison, only 12 percent of operators said they expect economic conditions to worsen in the next six months, down from 16 percent who reported similarly last month.
Along with a positive outlook for sales and the economy, restaurant operators’ plans for capital expenditures also remained solid. Forty-eight percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 47 percent who reported similarly last month and the strongest level in six months.