Foodservice Equipment Reports

Operator Worries Apparent In NRA’s November RPI

For the first time in 14 months, the National Restaurant Association’s Restaurant Performance Index fell below the 100 level that separates industry expansion from contraction in the October survey.  Worries about the election, now concluded, the federal fiscal cliff debate, the healthcare law and the certainty of higher food costs pushed down expectations dramatically.

The overall index, released Nov. 30, fell 0.9 point to 99.5. The RPI had been in expansion territory since September 2011. Both the Current Situation Index and Expectations Index also stand below the tipping point at 99.3 and 99.7 respectively.

The only positive indicator in the eight component index was a 1.2 point jump—to 100.1—in the marker tracking operators that plan to make a capital purchase in the next six months.

In the CSI, both same-store sales and traffic fell for the second month in a row. Same-store sales were off 0.8 point, but remain in expansion territory at 100.4. The traffic component fell 0.7 point and is now at 98.9. The indicator tracking operators that made a capital buy in the past three months fell half a point to 99.2. It had risen strongly in the month-prior reading.

Operators are clearly worried about the near-term future. In the EI, the component for future same-store sales fell 2.3 points while that tracking business conditions six months out dropped 2.6 points. The business condition outlook marker is now the lowest component in the overall index at 98.2. And to put it into historical perspective, operators’ view of future business conditions is at its lowest level since December ’08.

Operators’ pessimism may soften a bit once the federal budget issues are resolved. But food price hikes are a certainty, and will affect operator margins throughout next year.