Friday, January 29, 2010

Dec. Restaurant Activity Index Highest Since Feb.

"Driven by improving sales and traffic levels, the National Restaurant Association's comprehensive index of restaurant activity rose sharply in December. The Association's Restaurant Performance Index (RPI) a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry stood at 98.7 in December, up 0.9% from November and its strongest level since February 2008 (see chart above). Despite the solid improvement, the RPI remained below 100 for the 26th consecutive month, which signifies contraction in the index of key industry indicators.

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 100.0 in December the first time in eight months that the index reached the 100 level (see chart above).

Restaurant operators are increasingly optimistic about sales growth in the months ahead. Thirty-five percent of operators expect to have higher sales in six months (compared to the same period in the previous year), up from 31% who reported similarly last month and the highest level in more than two years. In comparison, 21% of operators expect their sales volume in six months to be lower than it was during the same period in the previous year, down from 24% last month.

Restaurant operators are also more optimistic about the direction of the economy in the months ahead. Thirty-four percent of restaurant operators said they expect economic conditions to improve in six months, while 18 percent expect economic conditions to worsen during the next six months. Last month, 27 percent of operators said they expected the economy to improve in six months, while 19 percent expected economic conditions to deteriorate."


At 1/29/2010 9:03 PM, Blogger Unknown said...

No question this is good news for the survivors in the measurement survey. Chances are they will be in business in the foreseeable future because of the "adjustments" made in their business. The data does not count the wreckage suffered in the industry. I assume a bankrupt or closed businessman does not answer a survey.

At 1/30/2010 8:43 AM, Blogger rjs said...

it only stand to reason that business would finally start to contract slower after two years of rapid contraction...tell us when it actually starts to grow...

At 1/30/2010 10:59 AM, Anonymous Apache said...

First of all, both indexes show contraction. The contraction is CUMULATIVE so this is not good news.

Second, the current situation index is still near record low and a LONG way to go to get to expansion.

Third, note that expectations have almost ALWAYS been higher than the current situation and almost always trailed actual trends of the current situation. Note the divergence between expectations and current situation from Jan 09 onward.

Not only don't these numbers tell you what you want to hear, they don't have good predictive power.


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