The National Restaurant Association’s Restaurant Performance Index was off to a strong start this year because of improved optimism among restaurant operators, but that optimism recently lost momentum. The more subdued outlook caused the RPI to decline in June for the third straight month and stood below 100 for the second month in a row.
“Although the current situation indicators registered a modest improvement in June, each of the four expectations indicators dipped for the second consecutive month,” said Hudson Riehle, senior vice president, research and knowledge, NRA.
The RPI stood at 99.5 in June, down 0.3 percent from May and the lowest index level since February.
The RPI consists of two components that measure the current business climate trends and the six-month outlook in four industry indicators: same-store sales, traffic, labor and capital expenditures.
The Current Situation Index stood at 98.8 in June – up 0.1 percent from May – but remained below 100 for the 34th straight month. The Expectations Index stood at 100.2 in June – down 0.6 percent from May. It was at its lowest level in five months. Despite the recent declines, the Expectations Index remained above 100 for the sixth consecutive month, which represents expansion in the forward-looking indicators.
Operators reported a slight same-store sales gain between June 2009 and June 2010, but a net decline in customer traffic levels. Operators also reported a dip in capital spending.
Forty-two percent of restaurateurs expect to have higher sales in six months, down from 43 percent last month and the lowest level in five months. In comparison, 21 percent expect their sales volumes to be lower than they were in the same period last year (up from 18 percent in last month).
“Restaurant operators are generally optimistic that sales and business conditions will improve in the next six months, but the strength of their optimism fell to a five-month low in June,” Riehle said.
Plans for capital expenditures fell to a six-month low. Forty-one percent reported plans to make capital expenditures for equipment, expansion or remodeling in the next six months, compared with 46 percent last month.
The full June Restaurant Performance Index report is available online, and additional information can be found on Restaurant TrendMapper. You also can watch a video of Hudson Riehle reporting on the June RPI and on how tourism drives restaurant industry sales growth.
