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What Does the Restaurant Performance Index Show Investors?

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NRA’s Restaurant Performance Index

The NRA (National Restaurant Association) tracks the restaurant industry’s health and outlook in the US. It releases the RPI (Restaurant Performance Index) every month. This indicator is indexed to 100. Values above 100 indicate an expansion period. Values below 100 indicate a contraction period.

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Interpretation

The RPI in January declined to 102.7. It was 102.9 in December. The RPI has been over 100, or in an expansion period, since March 2013. This indicator is still expanding. This is positive for the restaurant industry. We’ll discuss each of these indicators in the upcoming parts of this series.

The RPI is reported monthly. It’s a composite of the Current Situation Index and the Expectations Index. The Current Situation Index is made up of same-store sales, customer traffic, labor, and capital expenditure. The Expectations Index is made up of same-store sales, staffing, capital expenditures, and business conditions.

Takeaways for the restaurant industry

An expansion period indicates that the restaurants should see an increase in same-store sales, traffic, labor, and capital expenditures. This will benefit restaurant stocks like Yum! Brands (YUM), Darden Restaurants (DRI), McDonald’s (MCD), and Panera Bread (PNRA).

This should also be positive for the Consumer Discretionary Select Sector SPDR (XLY). XLY holds 4% of McDonald’s and several other restaurant stocks. The iShares Global Consumer Discretionary ETF (RXI) holds about 2.5% of McDonald’s.

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