FOR IMMEDIATE RELEASE, January 31, 2012
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Watch a video summary of the December RPI <http://www.restaurant.org/research/economy/rpi/> .
Restaurant Performance Index Rose to Highest Level in Nearly Six Years
Restaurant operators reported strong same-store sales and customer traffic levels in December; Operators’ plans for capital spending at highest level in more than four years
(Washington, D.C.) Fueled by solid same-store sales and traffic results and a bullish outlook among restaurant operators, the National Restaurant Association’s <http://www.restaurant.org> Restaurant Performance Index (RPI) rose sharply in December. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.2 in December, up 1.6 percent from November and its highest level in nearly six years. In addition, December represented the third time in the last four months that the RPI stood above 100, which signifies expansion in the index of key industry indicators.
“Aided by favorable weather conditions in many parts of the country, a solid majority of restaurant operators reported higher same-store sales and customer traffic levels in December,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, restaurant operators are solidly optimistic about sales growth in the months ahead, and their outlook for the economy is at its strongest point in nearly a year.”
“Coupled with the solid November results, the RPI’s impressive December performance bodes well for continued positive industry momentum in the year ahead,” Riehle added. “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.”
Watch a video of Riehle <http://www.restaurant.org/research/economy/rpi/> summarizing the December RPI.
The RPI is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, and index values below 100 represent a period of contraction for key industry indicators. 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 102.1 in December – up a solid 1.9 percent from November and its strongest level in seven years. December also represented the third time in the last four months that the Current Situation Index stood above 100, which signifies expansion in the current situation indicators.
Building on a solid November performance that saw the strongest same-store sales results in more than four years, restaurant operators reported even better numbers in December. 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.
Restaurant operators also reported solid customer traffic results in December. 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 November, 41 percent of operators reported higher customer traffic, while 32 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 four industry indicators (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. In addition, December marked the fourth consecutive month that the Expectations Index stood above 100, which represents a positive outlook among restaurant operators for business conditions in the months ahead.
For the first time in a year, a majority of restaurant operators expect their sales to be higher in the months ahead. 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.
Restaurant operators are also much more optimistic about the direction of the overall economy in the coming months. Thirty-nine percent of restaurant operators said they expect economic conditions to improve in six months, up from 27 percent last month and the strongest level in nearly a year. In comparison, only 11 percent of operators said they expect economic conditions to worsen in the next six months, down from 16 percent who reported similarly last month.
With higher sales and an improving economy expected in the months ahead, restaurant operators are also beefing up plans for capital spending. Fifty-five 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.
The RPI is based on the responses to the National Restaurant Association’s Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor, and capital expenditures. The full report <http://www.restaurant.org/pdfs/research/index/201112.pdf> and a video summary <http://www.restaurant.org/research/economy/rpi/> are available online.
The RPI is released on the last business day of each month, and more detailed data and analysis can be found on Restaurant TrendMapper (www.restaurant.org/trendmapper <http://www.restaurant.org/trendmapper> ), the Association's subscription-based service that provides detailed analysis of restaurant industry trends.
National Restaurant Association's Restaurant Performance Index
Values Greater than 100 = Expansion; Values Less than 100 = Contraction
Source: National Restaurant Association
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 960,000 restaurant and foodservice outlets and a workforce of nearly 13 million employees. We represent the industry in Washington, D.C., and advocate on its behalf. We operate the industry's largest trade show (NRA Show <http://www.restaurant.org/show> May 5-8, 2012, in Chicago); leading food safety training and certification program (ServSafe <http://www.servsafe.com/> ); unique career-building high school program (the NRAEF's ProStart <http://prostart.restaurant.org/> , including the National ProStart Invitational April 27-29, 2012, in Baltimore, Md.); as well as the Kids LiveWell <http://www.restaurant.org/kidslivewell> program promoting healthful kids' menu options. For more information, visit www.restaurant.org <http://www.restaurant.org/> and find us on Twitter @WeRRestaurants <http://twitter.com/WeRRestaurants> , Facebook <http://www.facebook.com/NationalRestaurantAssociation> and YouTube <http://www.youtube.com/restaurantdotorg> .
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