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Restaurant Industry Outlook Shows Improvement and Capital Spending Uptick
Dec 8, 2009
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The outlook for the restaurant industry improved somewhat in October when the U.S.'s National Restaurant Association comprehensive index of restaurant activity showed its first gain in three months, and included a capital spending uptick.

The Restaurant Performance Index (RPI) is a monthly composite index tracking the current health of, and outlook for, the U.S. restaurant industry. The RPI stood at 98.0 in October, up 0.5% from September.

“Although restaurant operators continue to report soft same-store sales and customer traffic levels, they are somewhat more optimistic about improving conditions in the months ahead,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Restaurant operators reported a positive six-month economic outlook for the fourth consecutive month, and the proportion planning for capital expenditures rose five percentage points.”

But the RPI remained below 100 – signifying contraction in the index of key industry indicators – for the 24th consecutive month.

The RPI is based on the responses to the National Restaurant Association’s Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators, and it consists of the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 96.5 in October – up 0.4% from September and its first improvement in three months. However, October still represented the 26th consecutive month below 100, which signifies contraction in the current situation indicators.

Capital Spending Uptick

Although sales and traffic levels remained soft, operators reported a modest uptick in capital spending activity: 40% of operators said they made a capital expenditure for equipment, expansion, or remodeling in the last three months, up from 37% who reported similarly last month.

The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 99.6 in October – up 0.6% from September’s level of 99.0.

Restaurant operators remain mixed about sales growth in the months ahead, with 29% expecting higher sales in six months (compared to the same period in the previous year), matching the proportion who expect to have lower sales in six months.

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