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NRA: Operators optimistic for year ahead

Industry ends 2016 on a weak note

Weak same-store sales and traffic didn’t dampen operators’ optimism in December, according to the National Restaurant Association’s most recent Restaurant Performance Index.

Thanks to that optimism, the industry expanded in December, albeit at a slower rate than in November. The association said that the index, a monthly measure of the state of the industry, closed out 2016 at 100.5, down slightly from 100.7 in November.

The association considers the industry to be in expansion mode when the index reaches above 100. 

According to the NRA, 38 percent of operators said same-store sales increased in December, up slightly from 37 percent who reported an increase in November. But 42 percent reported a same-store sales decline, up from 40 percent in November. 

Traffic continued to be the main problem: 29 percent of operators reported an increase in traffic in December, while 47 percent reported a decline. That was slightly better than November, when 26 percent reported an increase in traffic and 52 percent reported a decline.

The numbers were an appropriately weak finish to a weak year. The last time a majority of operators told the association same-store sales increased was in April 2016.

Because of the weak results, the association said its Current Situation Index was 99.5 in December, down from 99.7 in November. The RPI consists of two indexes, one measuring the current situation and another measuring operator expectations.

Still, expectations were strong. The Expectations Index was unchanged in December, at 101.6.

Operators believe same-store sales and traffic will improve: 39 percent told the NRA that sales should improve in the next six months, up from 31 percent in November. Only 10 percent expect sales to fall, down from 16 percent in November.

Operators are also “cautiously optimistic” about business conditions, with 33 percent saying they expect conditions to improve in the next six months. Only 15 percent expect conditions to worsen.

That was the lowest level of optimism since October, but since the presidential election of Donald Trump, the industry’s overall view of business conditions has surged.

In October, 14 percent of operators said business conditions would improve, and 29 percent said they would worsen. 

The next month, those figures were reversed, and they’ve stayed at those levels ever since. 

But operators have long maintained healthy expansion plans, with 57 percent of those surveyed saying they expect to expand or remodel in the next six months. Fifty-seven percent said they made a capital expenditure in the past three months. 

December was the 27th straight month that a majority of restaurant operators said they made a major capital expenditure in the prior three months. 

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

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