NRA Index Rebounds Sharply, Though Cap-Ex Measures Soften

The extra Leap Year day and better winter weather this year than last helped drive a surge in restaurant current same-store sales and customer traffic in February. That pushed the National Restaurant Association’s February Restaurant Performance Index up a strong 1.5 points to 102.1, returning it to where it stood in October.  That was before a sharp decline in December—driven in part by turmoil in the equities markets as well as some brutal winter weather on the East Coast—ended a 33-month string of the RPI residing above 100, signaling industry expansion. On the other hand, the two indicators tracking capital spending, both of which rebounded sharply in January, were flat or down sharply in February.

The Current Situation Index rose 3.1 points in February to 102.8, reversing two consecutive months during with the CSI fell into contraction territory. The markers for current same-store sales and customer traffic made remarkable 5.1 and 5.3 point jumps respectively. The labor indicator which tracks employee counts and hours rose 2.2 points. The extra day in February helped as did milder weather than last year.

The Expectations Index, however, fell slightly to a still postitive 101.4. But nearly all the decline came from the sharp drop in the future-looking capital-spending marker. The outlook for same-store sales the next six months jumped 1.4 points and the staffing outlook rose 0.2 point.  The outlook for business conditions six months out fell a slight 0.1 point to 99.6. It has now been below the 100 tipping point for four consecutive months. Operators’ slight pessimism about the near-term future is probably driven by concern about rising labor costs.

Despite the weakness in February, both capital spending measures remain quite positive. The indicator which tracks capital spending activity for the past three months was flat at 102.3, as 61% of those surveyed said they made a capital buy in February, the same number as January. That percentage a year ago February was 59%. The marker which tracks plans to make a capital expenditure in the next six months fell sharply by 1.6 points to 101.3, still well above the tipping point. Fifty-six percent of operators reported plans to spend for capital goods over the next half year, down from a very robust 65% in January. In February 2015, that number was 64%.

The complete RPI can be viewed at “””

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