Restaurant index rises for first time in three months

by Jeff Gelski
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WASHINGTON — The Restaurant Performance Index stood at 101.9 in August, up 1% from July as it gained for the first time in three months, the Washington-based National Restaurant Association reported Sept. 30.

“The August gain in the R.P.I. was fueled by stronger same-store sales and customer traffic results, aided by continued improving economic conditions,” said Hudson Riehle, senior vice-president of the Research and Knowledge Group for the association.  “Looking forward, restaurant operators remain generally optimistic about continued sales growth, while a majority plans to make a capital expenditure in the next six months. However, operators still report food costs and government among top challenges that continue to negatively affect the operating environment.”

The monthly composite index tracks the health of and outlook for the U.S. restaurant industry. Index values above 100 indicate that key industry indicators are in a period of expansion. The index has two components, the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures the indicators of same-store sales, traffic, labor and capital expenditures, stood at 101.8 in August, which was up 1.1% from July and the strongest level in three months. Sixty-two per cent of restaurant operators reported a same-store sales gain between August 2013 and August 2014, which was up from 54% in July. Twenty-one per cent reported a same-store sales decline in August, which compared to 30% in July.

The Expectations Index measures restaurant operators’ six-month outlook for the four industry indicators of same-store sales, employees, capital expenditures and business conditions. The Expectations Index stood at 102.1 in August, up 0.9% from July and the highest level in three months. Forty-five per cent of restaurant operators expect to have higher sales in six months when compared to the same period in the previous year, which was down from 47% in July. Five per cent expect sales volume to be lower, which was down from 13% in July.

The Expectations Index also showed 27% of restaurant operators said they expect economic conditions to improve in six months while 13% expect the economy to worsen. The remaining 60% expect economic conditions to be about the same as they are now.
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