Good News! Restaurant Performance Index Climbs

Restaurant Performance Index Climbs its Highest in Five Months

 

Good news for the food service sector! In late December, the National Restaurant Association reported that its Restaurant Performance Index increased 0.6% from October to November, landing at a firm 100.6 in November, from October. This was the third straight month the index stood at over 100. But what does this mean in plain English?

 

It means the food service sector of the economy is growing – or at least, it means that key indicators of growth are showing expansion. Any Restaurant Performance Index over 100 indicates this expansion.

 

What Does the Restaurant Performance Index Mean for the Future?

 

“That’s great,” some of you may be saying. “It’s nice that this happened at the end of 2011. But what does 2012 hold for me?”

 

To understand that, it helps to understand where the Index comes from. Restaurant owners report same-store sales, customer traffic levels, outlook for the future, and expenditures planned for the next six months (such as remodeling, new equipment, etc). All of these are indicators of the health of the industry (or the lack thereof).

 

Same Store Sales Highest in Four Years

 

One of the most positive indicators is that, overall, operators showed their strong net positive same store sales in over four years.

 

This wasn’t just from individuals who started spending more per visit, during the holidays: customer traffic showed an increase in November as well.

 

Economic Outlook Good for Restaurants

 

The Restaurant Performance Index isn’t the only indicator that bodes well for the restaurant industry. The RPI also takes into consideration overall economic factors as well.

 

It also doesn’t hurt to consider that some areas hardest hit by the recession – such as Las Vegas’s housing and construction market – have been picking up. In some areas, more construction and related loans were approved in the first half of 2011 than in all 12 months of 2010 combined.

 

While the country may not be out of the forest just yet, the Restaurant Performance Index shows that things are looking up for the food service industry – which hopefully tells us something about the nation’s economy as a whole.

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