NRA’s RPI Reaches 102.2 in December

Operators' plans for capital spending at highest level in more than four years.

The National Restaurant Association's Restaurant Performance Index experienced a sharp increase in December, climbing 1.6 percent compared from November to 102.2. The NRA attributed the increase to solid same-store-sales and traffic levels, which helped to brighten operators' outlook for the coming months.

The RPI is a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry. December was the third time in four months that the RPI exceeded 100, which signals expansion among the index's key indicators.

"Coupled with the solid November results, the RPI's impressive December performance bodes well for continued positive industry momentum in the year ahead," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "The ripple effect will likely be felt throughout the supply chain as well, with restaurant operators' plans for capital spending rising to its highest level in more than four years."

The Current Situation Index, which measures current trends among same-store sales, traffic, labor and capital expenditures, stood at 102.1 in December – up a solid 1.9 percent from November and its strongest level in seven years. Sixty-nine percent of restaurant operators reported a same-store sales gain between December 2010 and December 2011, while only 18 percent reported a same-store sales decline. This marked the strongest net positive sales performance since February 2004, when 70 percent of operators reported a sales gain and 17 percent reported lower sales, according to the NRA.

Fifty-seven percent of restaurant operators reported higher customer traffic levels between December 2010 and December 2011, while just 23 percent reported a traffic decline. In addition to positive sales and traffic levels, capital spending activity among restaurant operators continues to trend upward. Forty-eight percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the highest level in six months.

The Expectations Index, which measures restaurant operators' six-month outlook for such industry indicators as same-store sales, employees, capital expenditures and business conditions, stood at 102.3 in December – up 1.3 percent from November and its highest level in a year, according to the NRA.

Fifty-one percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 41 percent who reported similarly last month. In comparison, only seven 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 from 12 percent last month.

With higher sales and an improving economy expected in the months ahead, 51 percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 47 percent last month and the strongest level in more than four years, according to the NRA.