The restaurant performance index

By

Updated

National Restaurant Association performance index

The National Restaurant Association tracks the health of the restaurant industry in the US and provides a monthly outlook for it with its restaurant performance index (or RPI). This measure is indexed from 100. Values above 100 indicate an expansion period, and values below 100 indicate a contraction period.

 Indi Nov NRA's Restaurant Performance Index 2014-11-17

Article continues below advertisement

Interpretation

The September RPI increased to 101 from 100.2 in September 2013. The RPI has been over 100, or in expansion, since March 2013. This is positive for the restaurant industry. We’ll discuss each variable tracked by the RPI in the upcoming parts of this series.

The RPI is reported every month. It’s the combination of a current situation index and an expectations index. The current situation index is made up of four indicators:

  1. Same-store sales
  2. Customer traffic
  3. Labor
  4. Capital expenditure

The expectations index is also made up of four indicators:

  1. Same-store sales
  2. Staffing
  3. Capital expenditures
  4. Business conditions

Takeaways for the restaurant industry

An expansion period indicates that restaurants should see an increase in same-store sales, traffic, labor, and capital expenditures. Such a period would benefit restaurant stocks such as Yum! Brands, Inc. (YUM), Darden Restaurants, Inc. (DRI), McDonald Corporation (MCD), and Panera Bread Company (PNRA). This should also be positive for the exchange-traded Consumer Discretionary Select Sector SPDR Fund (XLY).

Advertisement

More From Market Realist