NRA Cap-Ex, Sales And Traffic Indicators “Corrected” In August

Several components of the National Restaurant Association’s Restaurant Performance Index fell sharply in August from record or near record highs in July. Current same-stores sales and traffic and both measures of capital spending activity recorded big drops, as the overall index fell 1.2 points to 101.5. It was the lowest reading for the RPI in 11 months.

But the index remained well above the 100 level that separates industry expansion from contraction and it was the 30^th consecutive month the index has been in positive territory. All eight components were above 100, with two forward-looking indicators showing improvement.

The markers for current same-store sales and customer traffic both fell a precipitous 3.1 points in August from July readings they had each reached only once before since the RPI was launched in 2002. Both remained above the 100 tipping point at 102.4 for same-store sales and 100.1 for traffic. The labor indicator, which tracks the number of employees and hours versus the same month a year ago, fell 1.2 points to 100.1. The four components of the Current Situation Index were down 2.3 points.

The Expectations Index, on the other hand, was off only 0.1 point and remains well above the tipping point at 103.2. The outlooks for same-store sales and general business conditions improved with the same-store sales indicator up 0.4 point while the business conditions marker rose 0.6 point. The gain in the latter marker is significant because operators had become quite pessimistic about future business conditions during the summer. The August gain pushed the component back to 100.1. It had been below the tipping point in June and July.

The RPI’s two capital spending indicators “corrected” in August from record and near-record highs in July. The marker that tracks capital spending during the past three months fell 1.6 points to a still strong 102.7, as 63% of operators reported they bought something, down from a record 72% in July. The indicator that tracks operators’ intentions to make a capital purchase fell 1.1 points to 102. The July reading had been exceeded only a few times before in 2004. Of those surveyed, 60% plan a capital expenditure, down from 66% in July.

The complete RPI report can be found at restaurant.org.