NRA's RPI Reached Five-Month High in November

Forty six percent of operators report making a capital expenditure for equipment in the past three months.

The National Restaurant Association's (NRA) Restaurant Performance Index (RPI) hit 100.6 in November, its highest level in five months and a 0.6 percent increase from October. In addition, November represented the second time in the last three months that the RPI exceeded 100, which signifies expansion in the index of key industry indicators.

The RPI consists of two components, the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends among same-store sales, traffic, labor and capital expenditures, stood at 100.2 in November compared to 99.5 in October. Driving this increase is the fact that 50 percent of restaurant operators reported a same-store sales gain between November 2010 and November 2011, while just 28 percent reported a same-store sales decline. According to the NRA, this represents the strongest net positive sales performance since August 2007, when 54 percent of operators reported a sales gain and 29 percent reported lower sales. Also, 41 percent of restaurant operators reported higher customer traffic levels between November 2010 and November 2011, while 32 percent of operators reported a traffic decline.

Capital spending activity among restaurant operators trended upward in recent months, with 46 percent of restaurant operators saying they made a capital expenditure for equipment, expansion or remodeling during the last three months, the highest level in five months.

The Expectations Index, which measures restaurant operators' six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 100.9 in November — up 0.4 percent from October and the third consecutive monthly gain. November also marked the third consecutive month that the Expectations Index exceeded 100, which represents a positive outlook among restaurant operators for business conditions in the months ahead.

Restaurant operators are more optimistic about sales growth in the months ahead, with 41 percent expecting higher sales in six months compared to the same period in the previous year. Only 12 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, down from 15 percent last month.

Restaurant operators' outlook for capital spending remains positive, with 47 percent planning to make a capital expenditure for equipment, expansion or remodeling in the next six months.

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