Restaurant Performance Index (RPI)

What Is the Restaurant Performance Index (RPI)?

The Restaurant Performance Index (RPI) is a month to month index that tracks the wellbeing and outlook of the U.S. restaurant industry. The National Restaurant Association, the world's biggest food-service trade group, distributes the index results on the last business day of every month.

Understanding the Restaurant Performance Index (RPI)

The Restaurant Performance Index (RPI) mirrors the consequences of a month to month survey of approximately 400 restaurateurs from one side of the country to the other. The survey measures replies in key areas, for example, same-store sales, traffic, labor, and capital expenditures.

The index, which was sent off in 2002, is contained two similarly weighted parts: the Current Situation Index and the Expectations Index. The Current Situation Index measures changes in same-store sales, customer traffic, the total number of total employees and their average hours worked, as well as capital spending. Every measurement is followed versus the year-prior month.

The Expectations Index, in the mean time, mirrors a six-month outlook for same-store sales relative to the same period the previous year; an outlook for the changes in the number of employees required in the next a half year; capital spending plans; and business administrators' sentiments about overall business conditions.

Every part breaks down survey results into an index value that is estimated comparable to a steady-state of 100. That is, readings below 100 demonstrate business contraction, 100 is the norm, and index values over 100 signal expansion.

The National Restaurant Association offers a significant part of the index data for free on its website and makes more definite data breakdowns accessible through a subscription service called Restaurant TrendMapper.

RPI Performance

The RPI has gone through a series of expansions and contracts, frequently coincident with the more extensive economy and stock market. Below is a figure portraying the value of the Index from 2004 through April of 2021. The chart clarifies that the restaurant sector was hit especially hard during the 2008-09 financial crisis and again in mid 2020 as the COVID-19 pandemic covered numerous businesses, particularly those expecting face to face attendance. Curiously, the RPI shows an enormous recovery leading into the final part of 2021 as COVID-19 limitations ease and pent-up demand is fulfilled by eating out.

Advantages and disadvantages of the Restaurant Performance Index

The Restaurant Performance Index (RPI) is one of several industry-performance metrics distributed by the National Restaurant Association. The index use statistical methods and offers valuable experiences into current business conditions and close term expectations. Restaurant administrators utilize the index to help with expectations that illuminate hiring and expansion choices.

While investment analysts watch the index decently closely, scarcely any utilization it to it anticipate developments for restaurant stocks. For investment purposes, the index is viewed as a coincident indicator, instead of a predictive one. Consequently, analysts and investors will more often than not utilize extra methods to anticipate returns for restaurant stocks.

Features

• Sent off in 2002, the RPI is delivered on the last business day of every month and measures both noticed trends and industry outlook.
• The National Restaurant Association's Restaurant Performance Index (RPI) is a month to month composite index that tracks the restaurant industry in the U.S.
• RPI Index values over 100 demonstrate that key industry indicators are in a period of expansion, while index values below 100 address a period of contraction for key industry indicators.