Industry

RPI hits 10-month high as business expectations improve

May 31, 2013
NRA
Driven by higher same-store sales and an improving outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index (RPI) hit a 10-month high in April. The RPI stood at 101.0 in April, up 0.4 percent from a level of 100.6 in March, and is the third time in the last four months that the RPI topped the 100 level, which signifies expansion in the index of key industry indicators.

"Growth in the Restaurant Performance Index was due largely to restaurant operators' healthier outlook for the business environment in the coming months," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "In particular, there was a dropoff in the proportion of operators who expect conditions to worsen in the months ahead, which suggests a broadening of the perspective that the expansion is firmly entrenched."

The RPI consists of two components - the Current Situation Index (measuring current trends) and the Expectations Index (measuring restaurant operators' six-month outlook) - and tracks the health of and outlook for the U.S. restaurant industry.

The Current Situation Index stood at 100.1 in April - up 0.3 percent from a level of 99.8 in March. April represented the first time in eight months that the Current Situation Index rose above 100. While overall sales were positive in April, restaurant operators reported a net decline in customer traffic for the fifth consecutive month.

The Expectations Index stood at 101.9 in April - up 0.5 percent from March and the highest level in 11 months. Each of the four expectations indicators stood above 100 for the fourth consecutive month, which indicates a firming of optimism for business conditions in the months ahead.

Restaurant operators also reported an uptick in plans for capital spending in the months ahead. Fifty-nine percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 55 percent who reported similarly last month.

Restaurant operators are also somewhat more optimistic about staffing growth in the months ahead. Twenty-two percent of operators plan to increase staffing levels in six months (compared to the same period in the previous year), while just 10 percent said they plan to cut positions.