The National Restaurant Association’s monthly Restaurant Performance Index (RPI) fell to its lowest level in two years as operators have become less optimistic about sales growth and the overall economy.
The RPI was 100.1 for April, a 1.8 percent decrease from March. The number measures the overall health of the restaurant industry, with any value over 100 representing a period of expansion and less than 100 indicating contraction. The industry has experienced a sustained period of growth since mid-2016, according to the RPI.
The RPI itself is comprised of 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’ six-month outlook in those same four areas. Both components were down in April, with the Current Situation Index falling 2.1 percent to 99.7, and the Expectations Index dropping 1.5 percent to 100.5.
The downturn comes even as operators reported a modest net increase in sales for the month. According to the NRA, 44 percent of restaurant operators saw a sales increase in April 2019 compared to April 2018. However, that was down from 60 percent that saw a sales increase in March and the lowest level in 11 months. Meanwhile, 39 percent of operators reported a sales decline in April, up from 22 percent the month before.
At the same time, fewer customers visited restaurants. Only 28 percent of operators reported an increase in customer traffic between April 2018 and April 2019, down from 48 percent in March and the lowest level since September 2018. On the flip side, 50 percent of operators saw a decline in customer traffic compared to April 2018, up from 30 percent in March. This was the highest proportion of operators reporting a decline in customer traffic since January 2018.
Despite these indicators, most restaurant operators continue to invest in their business. According to the NRA, 53 percent of operators said they made a capital expenditure for equipment, expansion, or remodeling within the last three months. Further, 55 percent expect to make a capital expenditure in the next six months.