WASHINGTON – The National Restaurant Association's Restaurant Performance Index (R.P.I.) fell below 100 in May for the first time in three months, on the heels of strong index growth earlier this year and amid sharply increasing wholesale food prices.
“Although the sales and customer traffic indicators softened in May, capital expenditure activity rose to its highest level in nearly two years,” said Hudson Riehle, senior vice president, research and knowledge. “This, along with a continued positive outlook for sales and the overall economy, signals restaurant operators remain optimistic that business conditions will improve in the months ahead.”
The R.P.I. consists of two components, the Current Situation Index and the Expectations Index. The Current Situation Index, which measures current trends, dipped 0.3% from April. The Expectations Index, which measures restaurant operators’ six-month outlook, stood at 100.8 in May – down 1.0% from 101.8 in April. Despite the decline, the Expectations Index remained above 100 for the fifth consecutive month, which represents expansion in forward-looking indicators.
The R.P.I. is a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry. It 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 an expansion period. Index values below 100 represent a contraction period for key industry indicators. The R.P.I. stood at 99.7 in May, down 0.7% from 100.4 in April.
In May, restaurant operators reported a net decline in same-store sales for the second straight month, as well as softer customer traffic. However, there was an uptick in capital spending. Forty-five percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the past three months, up from 40% last month and the highest level in nearly two years. In addition, 46% of restaurant operators report they plan to make a capital expenditure for equipment, expansion or remodeling in the next six months.