RPI: Sales, Traffic Down, But Outlook Is Stable

The operator outlook for business conditions over the next six months remained stable, but the National Restaurant Association’s Restaurant Performance Index posted a moderate decline in July, the result of softer same-store sales and customer traffic.

The RPI stood at 101.1 in July, down 0.6 point from June.

The July decline in the monthly composite index that tracks the health of and outlook for the U.S. restaurant industry was due largely to broad-based softness in the current situation indicators. Operators continue to report a net increase in same-store sales—though a little slower in July—and while they remain generally optimistic about sales growth in the months ahead, their outlook for the overall economy remains mixed.

The Current Situation Index fell 1.2 points to stand at 100.8 in July; it was the Index’s first drop in three months. Despite the decline, it remained above the 100 level in expansion territory. The Expectations Index remained in a months-long soft patch, edging up 0.1 point to 101.4 in July.

Perhaps it was the summer heat dampening sales and traffic number; although operators reported a net increase in same-store sales for the ninth consecutive month, July’s results were softer. The 53% who reported a same-sales increase in between June 2017 and June 2017 dropped to 47% in the like July-to-July period. Thirty-seven percent of operators reported a sales decline in July, up slightly from 33% a month prior.

On the bright side, operators continued to report solid levels of capital spending. Sixty-six percent of restaurant operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which represented the fifth consecutive month in which at least six in 10 operators reported making a capital expenditure.

Looking ahead, 59% are planning to make a capital expenditure for equipment, expansion or remodeling in the next six months, essentially unchanged from June.