Restaurant Performance Index Fell Below 100 in February as Sales ...

Friday, March 29th, 2013 ?

Restaurant operators remain generally optimistic about sales growth and the economy in the months ahead

Washington, DC? (RestaurantNews.com)? Due in large part to softer same-store sales and customer traffic levels, the National Restaurant Association?s Restaurant Performance Index (RPI) slipped below 100 in February. The RPI ? a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry ? stood at 99.9 in February, down 0.8 percent from January?s five-month high. February represented the fourth time in the last five months that the RPI stood below 100, which signifies contraction in the index of key industry indicators.

?The Restaurant Performance Index decline was due largely to softer sales and traffic results, which fell in February amid higher gas prices and the impact of the payroll tax hike,? said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. ?In addition, sales and traffic comparisons were more difficult due to the extra day in February 2012 as a result of Leap Year.?

?Despite the sales and traffic declines in February, restaurant operators remain generally optimistic about business conditions in the months ahead, which suggests they feel the setbacks will be temporary,? Riehle added.

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, while index values below 100 represent a period of contraction for key industry indicators. The Index 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 98.3 in February ? down 1.4 percent from January?s level. In addition, the Current Situation Index stood below 100 for the 6th consecutive month, which signifies contraction in the current situation indicators.

With sales comparisons more difficult in February due to Leap Year in 2012, restaurant operators reported a same-store sales decline for the first time in 21 months. Thirty-three percent of restaurant operators reported a same-store sales gain between February 2012 and February 2013, while 48 percent of operators reported lower sales. In January, 44 percent of operators reported higher same-store sales, while 37 percent reported a sales decline.

Restaurant operators also reported a decline in customer traffic levels in February. Twenty-four percent of restaurant operators reported higher customer traffic levels between February 2012 and February 2013, while 53 percent of operators said their traffic declined. In January, 33 percent of operators reported an increase in customer traffic, while 40 percent reported lower traffic levels.

Capital spending activity also dipped along with the sales and traffic results. Forty-eight percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 52 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 101.4 in February ? down slightly from January?s level of 101.6. Each of the four expectations indicators stood above 100 for the second consecutive month, which suggests restaurant operators remain generally optimistic about business conditions in the months ahead.

Although restaurant operators? outlook for sales growth remains positive, their expectations are slightly less bullish compared to last month. Forty-one percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 46 percent last month. Meanwhile, 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, compared to 17 percent last month.

Although restaurant operators have a net positive outlook for the overall economy for the second consecutive month, their confidence is tenuous. Twenty-five percent of restaurant operators said they expect economic conditions to improve in six months, down from 30 percent who reported similarly last month. Meanwhile, 20 percent of operators said they expect economic conditions to worsen in the next six months, unchanged from last month.

Restaurant operators continue to make plans for capital spending in the months ahead. Fifty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 59 percent who reported similarly last month.

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 is available online at Restaurant.org/RPI.

The RPI is released on the last business day of each month, and a more detailed data and analysis can be found on Restaurant TrendMapper, the Association?s subscription-based web site that provides detailed analysis of restaurant industry trends.

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 980,000 restaurant and foodservice outlets and a workforce of more than 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 May 18-21, 2013, in Chicago); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF?s ProStart, including the National ProStart Invitational April 19-21, 2013, in Baltimore, Md.); as well as the Kids LiveWell program promoting healthful kids? menu options. For more information, visit www.restaurant.org and find us on Twitter @WeRRestaurants, Facebook and YouTube.

Source: http://www.restaurantnews.com/restaurant-performance-index-fell-below-100-in-february-as-sales-and-traffic-levels-declined/

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