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Restaurant Owners Are Bullish on Their Industry

March 19th, 2013 ::

By Karen Axelton

Restaurant owners are feeling optimistic heading into the spring and summer seasons, and The National Restaurant Association’s latest Restaurant Performance Outlook reflects that enthusiasm, reaching a five-month high in the latest survey in January.

Restaurateurs’ outlook for same-store sales, capital spending and the economy as a whole all improved in January, pushing the RPI (a monthly composite index that tracks the health of the U.S. restaurant industry) to 100.6, up 1.0 percent from December and its highest level since August 2012.

An RPI above 100 means key industry indicators are in a period of expansion; an RPI below 100 means key industry indicators are contracting. The Index measures two components – both the Current Situation and the Expectations.

The Current Situation component measures current trends in same-store sales, traffic, labor and capital expenditures. The Expectations Index measures restaurant owners’ six-month outlook for same-store sales, employees, capital expenditures and business conditions. The Current Situation index was 99.7 percent, while the Expectations Index was 101.6—both an increase from the prior month.

Although there was a lot of uncertainty at the end of 2012 during the “fiscal cliff” standoff in Congress, restaurant operators’ outlook for sales growth has improved since then.  Forty-six percent of restaurant operators believe they will have higher sales in six months than during the same period in the previous year. That’s an increase from 37 percent last month, and the highest level measured in seven months.  Meanwhile, just 17 percent of restaurant operators believe their sales volume in six months will be lower than it was during the same period in the previous year—about the same as the 16 percent who felt that way last month.

Restaurant operators have a net positive outlook about the overall economy for the first time in four months.  Thirty percent of restaurant operators say they expect economic conditions will improve in six months, up from just 17 percent last month.  Twenty percent say they expect economic conditions to get worse in the next six months—a decline from 29 percent who said this last month.

Restaurant owners are planning to put their money where their mouths are, with more of them planning capital spending in the coming months. More than half (59 percent) say they will make capital expenditures for equipment, expansion or remodeling in the next six months, an increase from the 50 percent who reported such plans last month.

Image by Flickr user Willem! (Creative Commons)

The views expressed here are the author's alone and not those of Network Solutions or its partners.

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