NRA’s Performance Indicators Were Mixed In March

Four of the eight components of the Restaurant Performance Index fielded monthly by the National Restaurant Association were up in March, but the other four were down. The same mixed result was true of the Current Situation Index and the Expectations Index: half of the markers rose, half declined. Both indicators of capital spending fell in March, though the declines follow big gains in February. Both remain in positive territory.

The overall RPI was down 0.4 point to 102.2. It was the 25^th consecutive month the index indicated the restaurant industry is expanding. Any reading of any RPI component greater than 100 signals expansion. The overall index remains at a height not seen since 2006.

The Current Situation Index was off 0.2 point to 101.8. The current same-store-sales indicator rose 0.2 point to a very high 103.8, but the traffic indicator fell half of a point to 101.1. The labor component, a marker of current employee head count and hours, ticked up 0.1 point.

Same-store-sales expectations in six months also ran higher, up 0.1 point, as did the outlook for future business conditions. But the staffing indicator, which measures expected employee counts in six months, was down 0.9 point, perhaps responding to worries about calls for higher minimum wages. Rallies and demonstrations supporting higher wages for restaurant workers were prevalent during March.

The capital-spending indicators have been on a bit of a roller coaster since the last quarter of 2014, up strongly one month and down the next. March was a down month. The cap-ex measure that tracks spending for the past three months was down 0.6 point to 101.2—well above the tipping point—as 56% of those surveyed reported a purchase, down from 59% in the February RPI. Plans to make a cap-ex buy dropped two full points to 100.7 in March with 53% reporting such intentions. That was down from a very high level of 64% in February.

So-called “waffling” of indicators usually signals a change in trend is imminent. With general economic drivers of foodservice still very strong, it’s more likely the change in capital-spending activity will trend higher during the next few months.