Restaurant performance rises, despite slowdowns

Markets
Apr 4, 2014
by WLJ

Although challenging weather conditions in many parts of the country continued to impact customer traffic in February, the National Restaurant Association’s Restaurant Performance Index (RPI) remained above 100 for the 12th consecutive month. The RPI—a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry—stood at 100.5 in February, down 0.2 percent from January’s level of 100.7. Despite the modest decline, the fact that the overall RPI remains above 100 continues to signify expansion in the index of key industry indicators.

“Restaurant operators continued to report net positive same-store sales results in February, despite customer traffic levels that were challenged by the weather,” said Hudson Riehle, Senior Vice President of the Research and Knowledge Group for the Association. “Looking forward, operators are generally optimistic about sales gains in the months ahead, although they aren’t as bullish about the overall economy.”

Although results were mixed in February, restaurant operators reported net positive same-store sales for the 12th consecutive month. Forty-four percent of restaurant operators reported a same-store sales gain between February 2013 and February 2014, while 37 percent of operators reported a sales decline. February marked the third consecutive month in which fewer than half of restaurant operators reported higher same-store sales.

In contrast, restaurant operators reported a net decline in customer traffic for the third consecutive month. Thirty-five percent of restaurant operators reported customer traffic growth between February 2013 and February 2014, while 43 percent of operators reported a traffic decline. In January, 33 percent of operators reported higher customer traffic levels, while 50 percent reported a decline.

After three consecutive months of dampened customer traffic levels, restaurant operators reported a dip in capital spending activity. Forty-four percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the first time in 10 months that less than a majority of operators reported making an expenditure.

Restaurant operators remain cautiously optimistic about sales growth in the months ahead. Forty percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), essentially unchanged from 41 percent who reported similarly last month.

Meanwhile, 11 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, while 49 percent expect their sales to remain about the same.

Meanwhile, restaurant operators are somewhat less bullish about the direction of the economy. Twenty-nine percent of restaurant operators said they expect economic conditions to improve in six months, while 16 percent expect the economy to worsen. The remaining 55 percent expect economic conditions to remain generally unchanged in the next six months. — WLJ

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