Restaurant outlook remains positive

The National Restaurant Association’s Restaurant Performance Index (R.P.I.) remained strong at 102.1 in November, supported by positive sales and traffic as well as an optimistic outlook by restaurant operators who participate in the trade association’s monthly survey.

“The R.P.I. 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 N.R.A. “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. Overall, the R.P.I. topped the 102 level for the second consecutive month in November, the first such occurrence in nearly nine years.”

The R.P.I. is comprised of two parts, the current situation index and the expectations index. The current situation index measures same-store sales, traffic, labor and capital expenditures, stood at 101.4 in November, down 1.6% when compared with October.

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

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

The expectations index measures restaurant operators’ six-month outlook for four industry indicators, including same-store sales, employees, capital expenditures and business conditions, and it stood at 102.8 in November — up 0.3% from October’s level of 102.5. In addition, November represented the 25th consecutive month in which the Expectations Index stood above 100, which indicates restaurant operators are optimistic that business conditions will continue to improve in the months ahead.

A majority said they expect their sales to rise in the coming months, with 57% of restaurant operators saying they expect to have higher sales in six months (compared to the same period in the previous year), up from 52% who reported similarly last month. Only 7% 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% last month.

Restaurant operators also are becoming more optimistic about the overall economy. Forty-one per cent said they expect economic conditions to improve in six months, up from 35% last month and the highest level in nearly four years. Only 8% expect economic conditions to worsen in six months, while the remaining 51% expect economic conditions in six months to be about the same as they are now.