Restaurant performance picks up in November

Washington, D.C. -- Driven by improving same-store sales and customer traffic levels, the National Restaurant Association's Restaurant Performance Index (RPI) hit a five-month high in November 2013. The RPI, a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry, stood at 101.2 in November, up 0.3% from October and the strongest level since June.



In addition, the RPI stood above 100 for the ninth consecutive month, which signifies expansion in the index of key industry indicators. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 101.2 in November – up 0.3% from a level of 100.9 in October and the highest level in six months. Aside from September's downtick, the Current Situation Index remained above 100 in seven of the last eight months, which represents expansion in the current situation indicators.



A majority of restaurant operators reported higher same-store sales for the second consecutive month in November. Fifty-seven% of restaurant operators reported a same-store sales gain between November 2012 and November 2013, up from 54% in October and the highest level in six months. In comparison, 29% of operators reported a decline in same-store sales in November, compared to 30% in October.



Restaurant operators also reported improving customer traffic levels in November. Forty-seven percent of restaurant operators reported customer traffic growth between November 2012 and November 2013, up from 43% who reported a traffic gain in October. In comparison, 35% of operators reported a decline in customer traffic in November, down from 39% in October.



Along with higher sales and customer traffic, restaurant operators continued to report positive capital spending levels. Fifty-four percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the seventh consecutive month in which a majority of operators reported making expenditures.



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 101.1 in November, up 0.2% from a level of 100.9 in October. In addition, November represented the 13th consecutive month in which the Expectations Index stood above 100, which indicates that restaurant operators are generally optimistic about business conditions in the coming months.



Restaurant operators are generally positive about sales expectations in the months ahead. Thirty-eight percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 36% who reported similarly the prior month. Meanwhile, only 9% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, while 53% expect their sales to remain about the same.



In comparison, restaurant operators are less optimistic about the direction of the economy. Twenty-four percent of restaurant operators said they expect economic conditions to improve in six months, while 19% expect the economy to worsen. The remaining 57% expect the economy to continue trending sideways during the next six months.



Despite an uncertain economic outlook, a majority of restaurant operators are planning for capital expenditures in the coming months. Fifty-five percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 53% who reported similarly the prior month.