Restaurant Performance Index Remains Below Key 100-Point Threshold

December 31, 2012 03:10 AM
 

The National Restaurant Association’s (NRA) comprehensive index of restaurant activity -- the Restaurant Performance Index (RPI) -- improved in November, but remained below the key 100-point threshold that indicates expansion in the industry for the second straight month. The index improved 0.5 to stand at 99.9 in November.

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"The November gain in the RPI was driven by improving same-store sales and customer traffic levels, both of which registered their strongest performance in three months," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "However, restaurant operators remain concerned about the direction of the overall economy, due in large part to the uncertainty around the fiscal cliff."

Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators. The Index 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 99.8 in November – up 0.6 from 99.3 in October. 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 100.0 in November – up 0.4 from October. "Although November was an improvement over October’s reading of 99.7, it still signals that restaurant operators are uncertain about the business environment in the months ahead," says NRA.


Juli says: Given the fact that restaurants are a large component of red meat demand in the U.S., the slight uptick in the RPI is positive for the livestock markets. However, the index must return above the 100-point level to signal improved consumer confidence.

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