December marked the third time in the last four months the RPI was above 100, which signifies expansion in the index of key industry indicators.
"Driven by operators' optimistic outlook for sales and economic conditions in the months ahead, the RPI's Expectations Index rose to its highest level in nearly four years," said Hudson Riehle, NRA senior vice president of the Research and Knowledge Group.
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 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 99.7 in December – up 1.0% from November. The Current Situation Index remained slightly below 100 in December, as the softness in the labor and capital expenditure indicators outweighed the stronger same-store sales and customer traffic performances.
For the third time in the last four months, restaurant operators reported a net increase in same-store sales. Forty-eight percent of restaurant operators reported a same-store sales gain between December 2009 and December 2010, up from 40% of operators who reported higher same-store sales in November. Thirty-five percent of operators reported a same-store sales decline in December, down from 44% of operators who reported negative sales in November.
Restaurant operators also reported a net increase in customer traffic levels in December. Forty-three percent of restaurant operators reported an increase in customer traffic between December 2009 and December 2010, up from 36% of operators who reported higher traffic in November.
Restaurant operators are increasingly optimistic about sales growth in the months ahead. Fifty-five percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 42% last month and the strongest level in more than four years.
Restaurant operators are also more bullish about the direction of the overall economy. Forty-six percent of restaurant operators said they expect economic conditions to improve in six months, up from 37% last month.
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.