74 Percent of Operators Planning Capital Expenditure

The National Restaurant Association’s monthly Restaurant Performance Index (RPI) continues to surge, gaining 1.2 percent in April to reach a new all-time high.

However, as it did last month, the associated caution that the rapid uptick in the RPI reflected sales and customer traffic compared to the early months of the COVID-19 pandemic in 2020, when the restaurant industry came to a sudden halt across the country, and is therefore not a direct indication of the current health of the industry. Even so, the positive trajectory in the forward-looking indicators that make up a portion of the RPI point toward improving business conditions in the months ahead, the association said.

The rating measures the overall health of the restaurant industry. An RPI greater than 100 indicates a period of expansion for the market while values less than 100 indicate contraction. To determine the monthly RPI, the National Restaurant Association considers two components: the Current Situation Index, which measures current trends in same-store sales, traffic, labor, and capital expenditures; and the Expectations Index, which measures operators’ outlook for the next six months.

In April, the Current Situations Index measured 106.7 – a 2.2 percent increase from March. Meanwhile, the Expectations Index was 105.9, a 0.2 percent increase from the month before.

Those numbers reflected the much-improved conditions for the restaurant industry compared to a year before. Ninety-four percent of operators reported a same-store sales increase in April 2021 compared to April 2020, while only 3 percent reported a sales decline. Likewise, 93 percent of restaurant operators said their customer traffic increased year-over-year, and only 3 percent saw a decline.

The improving conditions appear to be making operators more willing to invest in their business. Sixty-one percent of operators said they made a capital expenditure for equipment, expansion, or remodeling in the past three months. That was the third consecutive monthly increase for the number of operators making capital expenditures and the highest level since February 2020. Further, it appears that number will only continue to rise, as 74 percent of operators said they plan to make a capital expenditure sometime in the next six months, up from 64 percent in March.