Restaurant Performance Index hits record low

by Keith Nunes
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WASHINGTON – The National Restaurant Association’s Restaurant Performance Index (R.P.I.) reached a record low during the month of December as the food service market continued to soften. The R.P.I. was 96.4 in December, down 0.2% from November and its 14th consecutive month below 100.

"The December decline in the Restaurant Performance Index was the result of a drop in the current situation component," said Hudson Riehle, senior vice-president of Research and Information Services for the N.R.A. "Same-store sales results were the softest in the history of the Restaurant Performance Index, with nearly two-thirds of restaurant operators reporting lower sales in December.

"The weak economy and declining sales continue to weigh on the minds of restaurant operators. Forty-five percent of restaurant operators said the economy is the No. 1 challenge facing their business, followed by building and maintaining sales volume at 27%."

The Current Situation Index, which measures current trends in four industry indicators, including same-store sales, traffic, labor and capital expenditures, stood at 95.7 in December – down 0.5% from November and its lowest level on record.

The R.P.I.’s Expectations Index, which measures restaurant operators’ six-month outlook stood at 97.2 in December – up slightly from November’s level of 97.1 Restaurant operators, however, are more pessimistic about sales growth in the coming months. Only 18% of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 21% who reported similarly last month. Forty-eight 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, matching the proportion who reported similarly last month.

Restaurant operators also remain uncertain about the direction of the economy. Seventeen percent of operators expect economic conditions to improve in six months, matching the proportion who reported similarly last month. Forty-one percent of operators said they expect economic conditions to worsen in six months, down from 49% who reported similarly last month.

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