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NRA: Rising traffic, falling gas prices fuel operator optimism

NRA: Rising traffic, falling gas prices fuel operator optimism

Restaurant Performance Index rises to 102.8 in October

The National Restaurant Association’s Restaurant Performance Index rose in October amid stronger traffic and growing optimism among operators, according to a report released Monday.

The index was 102.8 in October, a 1.8-percent increase from September. It was the 20th straight month the index was above 100, signifying industry expansion.

Lower gas prices appear to be boosting restaurant sales and traffic in the second half of the year. Gas prices have fallen 88 cents a gallon since the end of June. For a driver who uses 60 gallons a month, that represents a savings of $52.80.

“The positive same-store sales and customer traffic results suggest that restaurants are the beneficiaries of falling gas prices,” Hudson Riehle, senior vice president of the research and knowledge group at the NRA, said in a statement. “Elevated food costs continue to top the list of challenges reported by restaurant operators, but overall they remain generally optimistic that business conditions will improve in the month ahead.”

The RPI is based on responses to the NRA’s monthly tracking survey of operators nationwide. It uses two measurements to assess the health of the restaurant industry. The Current Situation Index measures operators’ current sales, while the Expectations Index measures operators’ outlook for the coming months. Both indexes increased in October.

The NRA's Hudson Riehle breaks down the latest RPI results >>

The Current Situation Index rose 2.1 percent from September, to 103.1, as a “solid majority” of operators reported higher same-store sales in October. Seventy-one percent of operators said same-store sales improved in October, rising from 63 percent who said sales improved in September. Only 11 percent said same-store sales fell during the month.

Traffic drove much of the improvement, as 55 percent of operators said they had more customers in October, rising from 40 percent in September. Sixteen percent said traffic fell.

Operators also have higher expectations for the coming months. The Expectations Index was 102.5 in October, a 1.6-percent increase from September and the 24th consecutive month that restaurateurs reported a positive outlook.

Fifty-two percent of operators said they expect sales to improve in six months, rising from 40 percent in September. Only 6 percent of operators said they expect sales volume to decline in the next six months.

Operators are more optimistic about the direction of the economy, as 35 percent said they expect conditions to improve in six months, rising from 20 percent last month. That represented the highest level of economic optimism in more than two years. Eight percent expect of operators economic conditions to deteriorate.

Higher expectations are driving expansion. Fifty-seven percent of operators said they made a capital expenditure for equipment, expansion or remodeling in the past three months, rising from 49 percent in September.

And they’re planning more spending. Fifty-nine percent said they plan to spend on equipment, expansion or a remodel in the next six months, rising from 53 percent last month. That marked the 14th straight month in which most operators said they planned to increase capital spending.

Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze

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