'Restaurant Performance Index' at three-year high

by Meat&Poultry Staff
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WASHINGTON – Improving same-store sales and customer traffic levels helped the National Restaurant Association's Restaurant Performance Index (RPI) reach its highest level in more than three years.

A monthly composite index that tracks the health of and outlook for the US restaurant industry, the RPI stood at 100.7 in October, up 0.4% from September and strongest level since September 2007. The RPI also stood above 100 for the second consecutive month, which signifies expansion in the index of key industry indicators.

"October's RPI gain was driven by continued improvements in the same-store sales and customer traffic indicators," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "Most notably, a majority of restaurant operators reported higher same-store sales in October, the first such occurrence since August 2007.

"In addition to improving current situation indicators, restaurant operators are increasingly optimistic about sales growth in the coming months, and also reported a positive outlook for staffing levels for the first time in six months," Riehle added.

The RPI is constructed so the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, and index values below 100 represent a period of contraction for key industry indicators. The RPI consists of two components, the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor, and capital expenditures), stood at 100.0 in October – up 0.6% from September and its second consecutive solid gain. In addition, the Current Situation Index reached the 100 level for the first time since August 2007, which meant 37 consecutive months below 100 in the contraction range.

Restaurant operators reported a net increase in same-store sales for the second consecutive month in October. Fifty-one percent of restaurant operators reported a same-store sales gain between October 2009 and October 2010, up from 44% of operators in September and the first time since August 2007 that a majority of operators reported higher same-store sales. Only 33% of operators reported a same-store sales decline in October, down from 38% of operators who reported negative sales in September.

Restaurant operators also reported an increase in customer traffic levels in October. Forty-four percent of restaurant operators reported an increase in customer traffic between October 2009 and October 2010, up from 38% of operators who reported higher traffic in September.

Restaurant operators remain solidly optimistic about sales growth in the months ahead. Forty-three percent of restaurant operators expect to have higher sales in six months (compared with the same period in the previous year), matching the proportion who reported similarly last month.

For the first time in six months, restaurant operators reported a positive outlook for staffing gains in the months ahead. Sixteen percent of operators expect to increase staffing levels in six months (compared with the same period in the previous year).
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