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NRA's RPI Chills with the January Weather

The National Restaurant Association's Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 100.2 in January, down 0.8 percent from its December level. Despite the decline, January marked the fourth time in the last five months that the RPI registered a score of more than 100, which signifies expansion in the index of key industry indicators. In addition, participating foodservice operators appear to be optimistic about the outlook for the industry.

The RPI 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 98.6 in January – down 1.1 percent from its December level. The Current Situation Index remained less than 100 for the third consecutive month, which signifies contraction in the current situation indicators. The NRA attributes this to extreme weather conditions in some parts of the country that kept sales levels down in January.

Along those lines, 30 percent of restaurant operators reported a same-store sales gain between January 2010 and January 2011, down from 48 percent of operators who reported higher same-store sales in December. In addition, 35 percent of restaurant operators reported a net decline in customer traffic levels when comparing January 2011 to the same month in 2010.

Despite the softer sales and traffic levels, restaurant operators continued to report relatively steady levels of capital spending, with 39 percent indicating they made a purchase that went toward equipment or expansion or remodeling of their facilities in the past three months. This level is roughly on par with what was reported in the previous three months.

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 101.8 in January – down 0.5 percent from December's 45-month high of 102.4, according to the NRA. Despite the decline, the Expectations Index stood at more than 100 for the sixth consecutive month, which signifies expansion in the forward-looking indicators.

Restaurant operators remain optimistic that their sales levels will improve in the months ahead, with 47 percent projecting increased revenues in six months. In comparison, 14 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, up from eight percent.

Plans for capital expenditures remain relatively steady among operators, with 48 percent saying they plan to invest in equipment, expansion or remodeling in the next six months. And, for the fourth consecutive month, restaurant operators reported a positive outlook for staffing gains in the months ahead. Twenty-four percent of restaurant operators plan to increase staffing levels in six months (compared to the same period in the previous year); while just 11 percent said they expect to reduce staffing levels in six months.