Foodservice Equipment Reports

All Markers In NRA’s May Performance Index Were Positive For First Time Since 2006

The restaurant business may have finally fully recovered from the Great Foodservice Recession. It took nearly six and a half years. Strong gains in current restaurant same-store sales and traffic in May led to a nearly full point jump in the National Restaurant Association’s Restaurant Performance Index, pushing the overall index to 101.8, its highest level since April 2012. All eight individual indicators stood above 100 in May for the first time since December 2006. Any RPI value above 100, including the overall and sub-indexes, signals expansion while values below 100 indicate contraction.

Seven of the eight indicators that make up the Index increased in May. One measure of capital spending rose strongly while the index for capital expenditure plans was slightly lower.

The four components of the Current Situation Index were all sharply higher. The marker for same-store sales surged 2.4 points to 104, its highest level since December 2011. The customer traffic indicator jumped 2.1 points and the labor component rose 0.8 point.

The increases in the Expectations Index were more muted, except for expectations for same-store sales in six months, which rose 0.8 point to 103.9. The staffing outlook, an indication of plans to hire, rose 0.2 point, while that for general business conditions in six month rose only a tenth point.

The indicator tracking operators that made a capital purchase in the past three months rose a full point to 100.3. It marks only the second month this component has been above the 100 tipping point since October 2007. It also reached 100.3 in January this year, but then fell back under 100. Among those responding, 52% reported they made a capital expenditure during the previous three months. Plans for cap-ex activity in the next six months slipped slightly, down 0.3 point to 101.4. But 57% of operators still plan to make a capital buy over the next half year.

The survey was nearly completed when the Obama Administration announced in late June a one-year delay of the employer mandates contained in the Affordable Care Act. That delay and the prospect for further delay or changes to the program will probably boost operator optimism in coming RPI reports.

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