Economic Indicators Buoy Bar and Restaurant Operators

Casual Dining Restaurant Survey Trends

Restaurant operators closed out 2014 with some good news about sales and traffic.

According to the National Restaurant Association’s Restaurant Performance Index, operators reported positive same-store sales and customer traffic levels, with the outlook for sales growth and the economy overall strengthening.

Recent reductions in gasoline prices, which affect disposable income important to operators, bode well for the first part of 2015 as well, according to economic predictors.

The RPI – a monthly composite index that tracks the health and outlook for the U.S. restaurant industry – slumped a touch from October, but it marked the 21st consecutive month in which the indicator stayed above 100, a score that indicates expansion of key industry indicators.

“The RPI registered a modest decline in November, as sales and customer traffic results were somewhat softer than their solid October levels,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “However, a majority of restaurant operators still reported higher same-store sales in November, and they are increasingly optimistic that business conditions will continue to improve in the months ahead.”

In addition, a sharp rise in consumer incomes for November, up 0.4 per cent on the previous month, boosted hopes of a strong holiday shopping season and total spending going forward. Analysts expect solid consumption and investment growth to drive the US onwards next year, but warn that the torrid pace of recent quarters is unlikely to continue.

A majority of restaurant operators reported higher same-store sales in November, though results were somewhat softer than October’s strong performance. Fifty-seven percent of restaurant operators reported a same-store sales gain between November 2013 and November 2014, down from 71 percent who reported higher sales in October. In comparison, 21 percent of operators reported a same-store sales decline in November, up from 11 percent in October.

Restaurant operators also reported a net increase in customer traffic in November. Forty-five percent of restaurant operators reported an increase in customer traffic between November 2013 and November 2014, down from 55 percent who reported higher traffic in October. Meanwhile, 30 percent of operators said their traffic declined in November, up from 16 percent who reported similarly in October.

A majority of restaurant operators expect their sales to rise in the coming months. Fifty-seven percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 52 percent who reported similarly last month. Meanwhile, only 7 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 6 percent last month.

Restaurant operators are also becoming more optimistic about the overall economy. Forty-one percent of restaurant operators said they expect economic conditions to improve in six months, up from 35 percent last month and the highest level in nearly four years. Only 8 percent expect economic conditions to worse in six months, while the remaining 51 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 and video summary are available online at Restaurant.org/RPI.

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