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Restaurant Operators' Outlook Darkens

The National Restaurant Association's Restaurant Performance Index (RPI) hit 101.0 in July, dropping .3 from June.

This slight decline happened despite the fact restaurant operators reported positive results in the areas of same-store sales and customer traffic.

"The RPI edged down as a result of a mixed outlook for the months ahead," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "Restaurant operators were less bullish about the direction of the overall economy, and rising wholesale food costs are once again starting to pose a significant challenge."

The RPI measures the overall health of the restaurant industry and any score that exceeds 100 indicates expansion among the index of key economic indicators.

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 July — down 0.1 percent from June. Key data points from the current situation index include:

  • Fifty-four percent of restaurant operators reported a same-store sales gain between July 2013 and July 2014, while 30 percent reported a sales decline. In June, 55 percent of operators reported higher same-store sales, while 27 percent reported lower sales.
  • Forty-one percent of restaurant operators reported an increase in customer traffic levels between July 2013 and July 2014, while 34 percent reported lower traffic levels. In June, 39 percent of operators said their customer traffic levels rose, while 41 percent reported a decline.
  • Fifty percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down slightly from 53 percent 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 101.2 in July — down from 101.7 in June. Key data points from the Situation Index include:

  • Forty-seven percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 44 percent who reported similarly last month. In comparison, 13 percent of restaurant operators expect their sales volume in 6 months to be lower than it was during the same period in the previous year, up slightly from 10 percent last month.
  • Twenty-five percent of restaurant operators said they expect economic conditions to improve in 6 months, while 19 percent expect the economy to worsen. The remaining 56 percent expect economic conditions in 6 months to be about the same as they are now.
  • Fifty-four percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next 6 months, down slightly from 59 percent who reported similarly last month.