RPI Climbs To 100.6, Driven By Solid Cap-Ex Spending Plans

Although same-store sales and customer traffic levels remain somewhat uneven, operators’ forward-looking plans to buy equipment and remodel stores pushed the National Restaurant Association’s Restaurant Performance Index to a modest increase in July. The RPI stood at 100.6 in July, up 0.3 point from June.

“The primary driver of the modest RPI gain in July was positive capital expenditure levels,” said Hudson Riehle, the NRA’s senior v.p.-research.

While their expectations for business conditions in the coming months are mixed, 65% of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 57% who reported similarly last month. Positive capital spending activity pumped up the Current Situations Index as well; even as sales and traffic results softened in recent months, restaurant operators continued to make purchases. Sixty-four percent said they made a capital expenditure for equipment expansion or remodeling during the last three months, which marked the 22nd consecutive month in which a majority of operators reported making an expenditure.

The Current Situation Index stood at 100.4 in July—up 0.5 point from a level of 99.9 in June. July marked the fifth time in the last six months that the index stood above 100.

July was the third consecutive month of mixed results on same-store sales. While 44% of operators reported a same-store sales increase between July 2015 and July 2016, an almost equal amount—45%–said they saw a sales decline. In addition, restaurant operators reported a net decline in customer traffic levels for the third consecutive month. A third of operators reported an increase in customer traffic between July 2015 and July 2016, while 46% saw a traffic decline.

The Expectations Index stood at 100.8 in June – up 0.1 point from its June level. While operators’ outlook for sales growth dampened somewhat in recent months and they remain uncertain about the direction of the overall economy, the index remained above 100 in expansion territory.

“While there is some volatility among index components, especially when looking at the current situation, operators’ plans for capital expenditures six months out remain solid. This fits in with how operators’ outlook for the future remains overall positive despite general economic choppiness,” Riehle said.

More details are available at Restaurant.org/RPI“””