“The RPI’s October gain was driven by broad-based gains in the index components, most notably solid improvements in same-store sales and customer traffic,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. “Looking forward, restaurant operators are relatively optimistic about sales growth in the months ahead, though their outlook for the overall economy remains mixed.”
The RPI features two components, a current situation index that measures same-store sales, traffic, labor and capital expenditures, and an expectations index that measures restaurant operators’ six-month outlook for same-store sales, labor, capital expenditures and overall business conditions.
The October current situation index stood at 100.9, up 1 percent compared to September’s current situation index. A majority of restaurant operators reported higher same-store sales in October, and the results were a solid improvement over September’s performance. Fifty-four per cent of restaurant operators reported a same-store sales gain between October 2012 and October 2013, up from 41 percent who reported higher sales in September. In comparison, 30 percent of operators reported a decline in same-store sales in October, down from 40 percent in September.
Restaurant operators also reported stronger customer traffic levels in October. Forty-three per cent of operators said customer traffic levels between October 2012 and October 2013 rose, up from 33 percent who reported a traffic gain in September. Thirty-nine per cent of operators reported a decline in customer traffic in October, down from 44 percent in September.
The expectations index stood at 100.9 in October, up 0.4 percent from September. Restaurant operators remained cautiously optimistic about the next six months. Thirty-six per cent expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 34 percent who reported similarly last month. Meanwhile, 11 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 13 percent in September.
In contrast, restaurant operators remained mixed about the direction of the economy. Twenty-seven per cent said they expect economic conditions to improve in six months, while 26 percent expect the economy to worsen. Operators’ outlook was an improvement over September, when 19 percent said they expected the economy would improve and 28 percent thought conditions would worsen.
Despite the uncertain outlook for the economy, a majority of restaurant operators said they are planning for capital expenditures in the months ahead. Fifty-three per cent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 52 percent who reported similarly in September.