Sunday, March 01, 2015

Restaurant Performance Index shows solid Expansion in January

by Bill McBride on 3/01/2015 09:30:00 AM

Note: In a related story, the WSJ reported yesterday Wages Rise at Restaurants as Labor Market Tightens

Restaurant wages zoomed up to an annualized pace of more than 3% in the second half of last year from below a 1.5% pace in the first half of 2013, according to the Labor Department. ... Many restaurant owners are now scrambling to hire and retain workers, a potential precursor to widespread wage gains if it signals diminished slack in the labor market.
Here is a minor indicator I follow from the National Restaurant Association: Restaurant Performance Index Remained Elevated in January
Buoyed by higher same-store sales and traffic and a positive outlook among operators, the National Restaurant Association’s Restaurant Performance Index (RPI) remained elevated in January. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.7 in January, which represented the fourth consecutive month above the level of 102. In addition, January marked the 23rd consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators.

“A solid majority of restaurant operators reported higher same-store sales and customer traffic in January, which helped keep the RPI well into positive territory,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, nearly six in 10 operators expect their business to improve in the next six months, with plans for capital expenditures also continuing at a high level.” br />
emphasis added
Restaurant Performance Index Click on graph for larger image.

The index decreased to 102.7 in January, down from 102.9 in December. (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month. This is another very solid reading - and it is likely restaurants are benefiting from lower gasoline prices and are having to raise wages - a little - to attract and retain workers.