Restaurant Performance Index edges upward in July

by Keith Nunes
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While the current restaurant situation is positive, there may be trouble on the horizon.

WASHINGTON – More consumers were eating out in July, which was reflected in the National Restaurant Association’s Restaurant Performance Index (R.P.I.). Improved same-store sales and customer traffic levels during the month pushed the R.P.I. up 0.7% to 102.7.

Hudson Riehle, senior v.p. of the N.R.A.’s Research and Knowledge Group

“July’s R.P.I. gain was fueled primarily by an improvement in the current situation indicators,” said Hudson Riehle, senior vice-president of the N.R.A.’s Research and Knowledge Group. “Although a solid majority of operators reported higher same-store sales and customer traffic levels in July, their outlook for both sales growth and the economy is more cautious compared to recent months.”

The R.P.I. features two components, a current situation index and the expectations index. The current situation index rose 1.2% compared to June and stood at 103.7. Seventy-three per cent of restaurant operators reported a same-store sales gain between July 2014 and July 2015, up from 64% who reported higher sales in June.  In comparison, 16% of operators reported a same-store sales decline in July, down from 20% in June.

Restaurant operators also reported stronger customer traffic results in July, with 59% reporting an increase in customer traffic between July 2014 and July 2015, up from 47% who reported higher traffic in June.  Twenty-three per cent of operators said their traffic declined in July, down from 28% in June.

The R.P.I.’s expectations index ticked up slightly between June and July, from 101.5 to 101.7, but operator outlook softened somewhat during the month, according to the N.R.A. Forty per cent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), which represented the fourth consecutive month of declining optimism.  In comparison, 12% expect their sales volume in six months to be lower than it was during the same period in the previous year, the highest level in 12 months.

Similarly, restaurant operators are less positive about the direction of the overall economy. Only 16% said they expect economic conditions to improve in six months, while 21% expect conditions to worsen. The sentiment marked the second consecutive month with a net negative outlook, the first such occurrence in nearly three years, according to the N.R.A.

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