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|Tuesday, February 01, 2011||10:57|
(Drinks Media Wire). Sales and traffic levels rose in December; Operators’ outlook improved
Driven by expanding same-store sales and customer traffic levels as well as growing optimism among restaurant operators, the outlook for the restaurant industry improved in December. The National Restaurant Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.0 in December, up a strong 1.1 percent from its November level. In addition, December marked the third time in the last four months that the RPI stood above100, which signifies expansion in the index of key industry indicators.
“The RPI’s solid gain in December was driven by improvements in each of the eight current situation and forward-looking indicators,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Restaurant operators reported positive same-store sales and customer traffic results in December, and their outlook for sales growth and the economy continued to improve.”
“Overall, the RPI stood above 100 for the third time in the last four months, which suggests that the recovery is gaining a firm foothold,” Riehle added. “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.”
Watch a video of Riehle providing an industry update, including the December RPI and Valentine's Day dining.
The RPI is constructed so that 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 99.7 in December – up 1.0 percent from November. However, 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 percent of operators who reported higher same-store sales in November. In comparison, 35 percent of operators reported a same-store sales decline in December, down from 44 percent 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 percent of operators who reported higher traffic in November. In comparison, 34 percent of operators reported a traffic decline in December, down from 45 percent in November.
Restaurant operators reported relatively steady levels of capital spending activity in recent months. Forty-one percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, roughly on par with the levels reported in the previous three monthly surveys.
The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 102.4 in December – up 1.2 percent from November and its highest level since March 2007.
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 percent last month and the strongest level in more than four years. Meanwhile, only eight 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, down from 14 percent who reported similarly last month.
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 percent last month. In comparison, only eight percent of operators said they expect economic conditions to worsen in the next six months, down from 15 percent who reported similarly last month.
Bolstered by an improving outlook for sales and the economy, restaurant operators’ plans for capital spending rose to its highest level in nearly three years. Fifty percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 47 percent who reported similarly last month.
For the third consecutive month, restaurant operators reported a positive outlook for staffing gains in the months ahead. Twenty-three percent of operators expect to increase staffing levels in six months (compared to the same period in the previous year), while just 11 percent plan to reduce staffing levels in six months.
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. The full report is available online.
The RPI is released on the last business day of each month, and more detailed data and analysis can be found on Restaurant TrendMapper (www.restaurant.org/trendmapper), the Association's subscription-based service that provides detailed analysis of restaurant industry trends.
|Company: National Restaurant Association|
|Address: 1200 17th St., NW - 20036 Washington DC|
|Country: UNITED STATES|
|Phone: +1 (202)-973-3677|
|Fax: +1 (202)-973-3961|