Restaurant Outlook Cautiously Optimistic
A majority of restaurant operators have reported positive same-store sales and customer traffic levels for 2014, and the outlook for continued sales growth remains positive, according to a recent report from the National Restaurant Association.
Driven by positive sales and traffic and an increase in capital expenditures, the National Restaurant Association’s Restaurant Performance Index (RPI) finished 2014 with a solid gain. The RPI is a monthly composite index that tracks the health and outlook for the U.S. restaurant industry. December marked the 22nd consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators.
“Growth in the RPI was driven by the current situation indicators in December, with a solid majority of restaurant operators reporting higher same-store sales and customer traffic levels,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, six in 10 operators reported making a capital expenditure during the fourth quarter, with a similar proportion planning for capital spending in the first half of 2015.”
“Overall, the RPI posted three consecutive months above 102 for the first time since the first quarter of 2006, which puts the industry on a positive track heading into 2015,” Riehle added.
When the NRA's Index total above 100, the group considers that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction.
For the 10th consecutive month, a majority of restaurant operators reported higher same-store sales, with the December results representing a solid improvement over November’s performance. Seventy-one percent of restaurant operators reported a same-store sales gain between December 2013 and December 2014, up from 57 percent who reported higher sales in November. In comparison, 19 percent of operators reported a same-store sales decline in December, down from 21 percent in November.
Restaurant operators also reported stronger customer traffic results in December. Sixty-one percent of restaurant operators reported an increase in customer traffic between December 2013 and December 2014, up from 45 percent who reported higher traffic in November. Twenty-three percent of operators said their traffic declined in December, down from 30 percent who reported similarly in November.
In addition, sixty percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 54 percent who reported similarly last month.
A majority of restaurant operators expect their sales to rise in the months ahead. Fifty-two percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down slightly from 57 percent who reported similarly last month. Meanwhile, only 5 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.
Restaurant operators are somewhat more cautious about the direction of the overall economy. Thirty-seven percent of restaurant operators said they expect economic conditions to improve in six months, down slightly from 41 percent last month. Only 7 percent expect economic conditions to worse in six months, while the remaining 56 percent expect economic conditions in six months to be about the same as they are now.
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.