RPI Cap-Ex Spending Intentions Hit 40-Month High

For the first time in three years, a majority of operators reported they plan to make a capital purchase during the next six months, according to the National Restaurant Association’s Restaurant Performance Index data for February. The component for such intentions reached a 40-month high at 100.4, with 52% of those surveyed saying they plan to make a capital buy. The marker reached 100 in December for the first time since February 2008.

The overall RPI also rose in February, up 0.4 point to 100.7; both the Current Situation Index and the Expectations Index were higher. For all components as well as the overall index, a value above 100 signals expansion. The RPI has been above 100 for five of the past six months. Strong increases in same-store sales and traffic boosted the index in February.

But while cap-ex purchase intentions have improved, actual purchases during the past three months have stagnated. The component for such purchases rose slightly, up 0.2 point to 98 in February; 40% of operators made a buy. But the marker has bumped along since last fall, and stands a half point below October ’10. It remains the lowest component of the eight-component RPI, and has not been above the 100 tipping point since October ’07. Capital purchasing is nearly always a lagging indicator following a downturn.

And while the cap-ex intentions component rose strongly, up 0.7, the operators’ outlook for business conditions over the next six months fell a sharp 1.3 points, probably a result of reactions to the increase in gasoline and food prices and instability in the Middle East.