Lower Gas Prices Yield Higher Restaurant traffic and sales in October

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December 5, 2014
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December 9, 2014

The National Restaurant Association’s Restaurant Performance Index posted solid gains in October, driven in large part to falling gas prices.

According to a news release, the RPI was 102.8 in October, up 1.8 percent from September.

The positive same-store sales and customer traffic results suggest that restaurants are the beneficiaries of falling gas prices, which were down 88 cents since the end of June.  Elevated food costs continue to top the list of challenges reported by restaurant operators, but overall they remain generally optimistic that business conditions will improve in the months ahead.

Current Situation Index

The RPI consists of two components – the Current Situation Index and the Expectations Index. The Current Situation Index, which measures same-store sales, traffic, labor and capital expenditures, stood at 103.1 in October – up 2.1 percent from September.

A solid majority of restaurant operators reported higher same-store sales in October, with results an improvement over September’s performance.  Seventy-one percent of reported a same-store sales gain between October 2013 and October 2014, up from 63 percent who reported higher sales in August.  Meanwhile, only 11 percent reported a same-store sales decline in October, down from 23 percent in September.

Respondents also reported stronger customer traffic results in October: 55 percent reported an increase in customer traffic between October 2013 and October 2014, up from 40 percent who reported higher traffic in September. In contrast, only 16 percent of operators said their traffic declined in October, down from 33 percent who reported similarly in September.

Along with stronger sales and traffic results, operators reported an increase in capital spending activity: 57 percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 49 percent who reported similarly last month.

Expectations Index 

The Expectations Index, which measures restaurant operators’ six-month outlook for the same four industry indicators, stood at 102.5 in October – up 1.6 percent from September’s level of 100.9.

A majority of restaurant operators expect their sales to rise in the months ahead: 52 percent expect to have higher sales in six months (compared to the same period in the previous year), up from 40 percent who reported similarly last month. Meanwhile, only 6 percent expect their sales volume in six months to be lower than it was during the same period in the previous year, down from 8 percent last month.

Operators are also somewhat more optimistic about the direction of the economy.  Thirty-five percent said they expect economic conditions to improve in six months, up from 20 percent last month and the highest level in more than two years.  Only 8 percent expect economic conditions to worse in six months, while the remaining 57 percent expect economic conditions in six months to be about the same as they are now.

For the 14th consecutive month, a majority of restaurant operators said they are planning for capital expenditures in the months ahead: 59 percent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 53 percent who reported similarly last month.

Source:  fastcasual.com, 12-1-14

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